Australia's new anti-price gouging laws come into effect today, making it illegal for supermarkets with more than $30 billion in revenue to charge prices deemed significantly excessive compared with the cost of supply. In practice, that means Coles and Woolworths—the only two supermarkets that meet the threshold—face fines of up to $10 million if found guilty of "significantly excessive" prices compared to the product's cost.
Treasurer Jim Chalmers previously said the changes would give Australians a "fairer go" at the checkout. But experts aren't so sure. "The new laws won't make grocery bills cheaper," Lisa Asher, retail expert at the University of Sydney Business School, told SBS News. "It will prevent groceries from getting more expensive due to price gouging from Coles and Woolworths only. The issue is, I don't actually think they were."
Proving price gouging isn't easy. Experts say the laws will be difficult to enforce in practice and even harder to use to win back customers' trust. "The law's real test won't be in court; it'll be in the public's gut. Shoppers don't compare prices to a retailer's costs, they compare them to what they remember paying last time," associate professor Meg Elkins, a behavioural economist at RMIT University, said.
The laws also don't define what "excessive" means or what counts as a reasonable margin—and with supermarkets selling thousands of products under shared costs, isolating any single item's true margin is difficult.
That difficulty lands at an already tense moment for supermarket trust. Coles and Woolworths remain two of Australia's least trusted brands, according to Roy Morgan research. In May, Coles were penalised over its 'Down Down' promotion for "misleading representation", temporarily increasing the prices of products before placing them on sale. Woolworths is being investigated for a similar practice.
"The biggest impact on supermarkets may be psychological; making them feel watched, rather than actually catching them out legally," Elkins said.
Asher said the biggest issue with the laws lies in who they don't cover. Companies like Amazon and Wesfarmers—which owns Bunnings Warehouse, Kmart, Officeworks and Priceline, among others—sit outside the laws' parameters and get off "scot-free", she said.
"I want to see these price gouging changes applied to large retail or big retail," she said. "I think it's a little bit cheeky and a little bit sly that Coles and Woolworths got the beating."
With prices unlikely to move because of the new laws, Asher said the best lever shoppers have is their own behaviour. "Be promiscuous in your relationship until you get the right amount of value. They need to win you," she said. "When there's greater cross-shopping, stores can see that a shopper is spending less and it forces them to improve their value offer to win you back."
She also recommends shopping in-store over online, as "you're seeing a curated version online of what they want you to see".
Should shoppers notice any suspicious price rises, they should keep receipts and take photos to report to the ACCC.
In summary, while the new anti-price gouging laws aim to prevent excessive pricing by Australia's largest supermarkets, their effectiveness in reducing grocery bills remains uncertain. Consumers are encouraged to remain vigilant, compare prices across different retailers, and report any suspicious pricing practices to the appropriate authorities.