Coles, Woolworths face price gouging ban, but questions remain over new laws

Australians could soon see tougher oversight of supermarket pricing, with new laws targeting alleged price gouging by Coles (ASX:COL) and Woolworths (ASX:WOW) now set to take effect from Wednesday, July 1.

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The reforms give the Australian Competition and Consumer Commission (ACCC) new powers to investigate whether Australia’s two biggest supermarket chains are charging excessive prices on everyday grocery items. However, exactly how the new rules will be enforced remains uncertain, as the legislation does not set a clear threshold for what qualifies as “price gouging.”

Instead, the ACCC will assess prices against factors including a supermarket’s costs and what it considers to be a reasonable profit margin. The watchdog will monitor selected grocery products and investigate complaints from shoppers and suppliers.

The changes apply only to supermarkets generating more than $30 billion in annual revenue – meaning Coles and Woolies – while rivals like Aldi, IGA, and Costco are excluded.

The new regime follows years of scrutiny over grocery prices and separate ACCC court action alleging misleading discount practices at both supermarket giants. Those cases remain before the courts.

Both Coles and Woolies have argued the new laws create uncertainty, saying Aussie supermarket margins remain thin and that rising supplier and operating costs have been a key driver of higher grocery prices.

Consumer advocates, meanwhile, say the reforms should improve transparency and accountability in Australia’s supermarket sector.

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