Grocery story
Coles and Woolworths make up 67%, while Aldi holds 9% of the market share. Pixabay

The federal government has announced it will take action to ensure the supermarket industry serves both consumers and producers fairly, so that Australians only pay reasonable prices at checkout and suppliers receive fair compensation for their goods.

"My Government is taking a range of actions to make sure Australians are paying a fair price at the checkout and Australian suppliers are getting a fair price for their goods. Customers don't deserve to be treated as fools by the supermarkets. They deserve better than that," Prime Minister Anthony Albanese stated.

The Supermarkets Inquiry Interim Report by the Australian Competition and Consumer Commission (AICCC) found that the country's biggest grocery chains, Coles and Woolworths, were acting as "oligopoly," limiting the incentive to compete on price.

The inquiry, instituted in January, looked into competition in the sector, soaring prices and shrinkflation, supermarket buyer power among other consumer and producer concerns.

The report stated the consumers have lost trust in the "sale price" and discount offers, and were worried about being forced to sign up for loyalty programs, which meant they have to give personal information to buy cheaper products.

The ACCC was following up with legal action against Coles and Woolworths for misleading consumers through discount pricing. The government also released the draft Food
and Grocery Code, which will cover the major supermarket chains such as Aldi, Coles, Woolworths and Metcash and impose a penalty amounting to multi-million-dollar for serious breaches.

"When it comes to supermarkets, we want to make sure that supermarkets deliver value and that consumers are looked after," AAP quoted Albanese as saying.

On Thursday, CHOICE released the second price monitoring report with details on where to buy the cheapest groceries.

The ACCC reported receiving responses from 21,000 consumers and 80 public submissions in its survey.

ACCC deputy chair Mick Keogh said it was a matter of concern how the grocers were abusing their supermarket power.

"Oligopolistic market structures can limit incentives to compete vigorously on price," he said. "We see Woolworths and Coles providing a broadly similar experience to customers through largely undifferentiated product ranges, pricing at similar levels and similar non-price offerings including loyalty programs. These difficulties reportedly arise from some of the pricing practices of some supermarkets, such as frequent specials, short-term lowered prices, bulk-buy promotions, member-only prices and bundled prices."

While Coles and Woolworths make up 67% of the market share, Aldi currently holds 9%, a figure it took 20 years to achieve.

Business Council of Co-operatives and Mutuals chief executive Melina Morrison said it was alarming that the two chains controlled over two-thirds of the supermarket industry, highlighting a lack of policies to support alternative structures like co-ops and mutuals.

Woolworths Group chief executive Amanda Bardwell stated that the grocery sector was competitive enough and customers have multiple options, while Coles maintained it supported a diverse market.