Grocery prices in Australia have climbed steadily, and two chains — Coles and Woolworths — now account for roughly two-thirds of supermarket sales. That kind of market concentration tends to soften the pressure to compete on price, which is one reason your weekly shop keeps costing more. The Australian Competition and Consumer Commission (ACCC) confirmed in its 2025 supermarket pricing inquiry that these oligopolies can limit the incentive to compete vigorously on price, and that there is a significant bargaining power imbalance between the big chains and their suppliers.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
New rules are coming. From 1 July 2026, very large retailers — those with annual revenue over $30 billion — will be banned from charging excessive prices for groceries under the mandatory Food and Grocery Code of Conduct. The ACCC will enforce it. But what does “excessive” actually mean, and how will it affect what you pay at the checkout? Here’s what you actually need to know.
What the new pricing rules mean for your grocery bill
The central concept here is excessive pricing. The European Court of Justice describes it as a price that bears no relationship to the economic value of the product supplied. Australian law hasn’t historically defined it, but the new Food and Grocery Code changes that for the biggest players. The idea is straightforward: a price should reflect what it actually costs to get that item to the shelf, plus a reasonable margin — not whatever the market will bear.
What I tend to notice is that most people assume the big supermarkets already operate this way. The ACCC’s findings suggest otherwise. The inquiry found that Coles and Woolworths are among the most profitable supermarkets globally, which raises the question of whether current pricing reflects genuine costs or something else entirely.
What happens when pricing isn’t transparent
The ACCC’s final report, released in March 2025, made clear that the current system has real consequences. Over 20,000 consumers responded to the ACCC survey, and more than 100 public submissions were made. Eight supplier roundtables were held. The message was consistent: people feel they’re paying too much, and suppliers feel squeezed.
The ACCC found a significant bargaining power imbalance between Coles and Woolworths and some suppliers. When suppliers can’t push back on unfair terms, those costs don’t disappear — they get passed down the chain or result in fewer product choices. The Productivity Commission has noted “aggressive competition” between the two giants for market share, but that hasn’t translated into price competition across the sector.
During the COVID-19 pandemic, the government defined price gouging under the Biosecurity Act as selling essential goods at more than 120% of the initial purchase price. That was a crisis measure. The new rules are broader and permanent, targeting the structural issue of market power rather than just emergency profiteering. The trade-off is real: price limits can reduce financial burdens, but they can also reduce incentives for sellers to restock supplies, potentially prolonging shortages.
Where the system falls short — and what goes wrong
Excessive pricing is hard to define and prove
Australian law has never formally defined “excessive pricing” or “price gouging” in a general sense. The EU standard — a price with no relationship to the economic value of the product — is a useful benchmark, but it’s not easy to apply to thousands of individual products. The ACCC will need sophisticated price reporting and monitoring systems to enforce the new rules, and that requires significant resources.
Supply chain costs are incredibly complex
Supermarkets manage thousands of products sourced from hundreds of local and international suppliers. Costs vary across time and location. Third-tier suppliers — those further down the chain — are often invisible in current tracking systems but still contribute to the final cost. Ensuring data accuracy and integrity in the reporting system will require substantial effort from everyone involved.
The big chains argue the rules could backfire
Coles and Woolworths have pushed back, arguing that the new rules could drive up costs and reduce deals for consumers. Their position is that pricing already reflects a complex mix of supply, manufacturing, transport, warehousing, labour, rent, and other factors. If the code forces them to justify every price against a cost baseline, they say it could lead to less flexibility on promotions and discounts.
Consumer inertia isn’t addressed by regulation alone
The e61 Institute’s research points to a problem that rules can’t fix: shoppers don’t always switch stores even when prices are better elsewhere. The government funds CHOICE to conduct quarterly surveys comparing a basket of basic goods and highlighting home brand products, but awareness of these tools remains low. Without active comparison, the pressure on supermarkets to compete on price stays weak.
How the new pricing framework will work in practice
Who is affected by the excessive pricing ban
The rules apply to very large retailers — those with annual revenue exceeding $30 billion. In practice, that means Coles and Woolworths, and potentially Aldi if its revenue crosses that threshold. Smaller grocers, independent stores, and specialty retailers are not covered. The ban takes effect on 1 July 2026, giving the industry time to set up reporting systems.
What pricing must now reflect
Under the mandatory Food and Grocery Code of Conduct, pricing must reflect supply costs and a reasonable margin. That means supermarkets need to account for first-tier, second-tier, and third-tier supplier costs, plus logistics, warehousing, labour, rent, and other operational expenses. The ACCC will expect regular cost data reporting from supermarkets, manufacturers, suppliers, and logistics providers.
How penalties will be enforced
The maximum penalty per contravention is the highest of $10 million, three times the value of the benefit derived from the breach, or 10% of the company’s turnover during the preceding 12 months. For comparison, penalties under the broader Competition and Consumer Act 2010 can reach $50 million, three times the benefit, or 30% of adjusted turnover. The ACCC will need additional resources, including sophisticated price reporting and monitoring systems, to enforce the code effectively.
The role of price comparison tools
The government already funds CHOICE to produce quarterly price reports comparing a basket of basic goods. The e61 Institute has suggested that enabling easier price comparison platforms could help overcome consumer inertia and increase competitive pressure. If shoppers can see at a glance which store offers the better price on their regular items, the incentive for supermarkets to compete on price grows.
Frequently asked questions about supermarket price matching
Does the new code mean all grocery prices will be regulated? ▾
What counts as a “reasonable margin” under the new rules? ▾
Can I report a supermarket for overcharging now? ▾
Will the new rules make home brands cheaper? ▾
What happens if a supermarket doesn’t report cost data? ▾
Does the code apply to online grocery prices? ▾
What the pricing shift means for Australian shoppers long-term
The ban on excessive pricing represents a broader shift in Australia’s competition and consumer protection approach. Rather than just policing anti-competitive behaviour after the fact, the government is moving toward proactive price regulation for the biggest players. Whether that translates into lower prices at the register depends on how well the ACCC can enforce the rules and how supermarkets respond. The reporting infrastructure isn’t built yet, and the data integrity challenges are substantial. But the direction is clear: the era of asking what the market will bear may be ending for Australia’s grocery giants.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Reimagine Your Expenses: Turn Australian Necessities Into Savings Opportunities.
Sources and Further Reading
Fuel Up Your Savings With Discount Fuel Gift Cards — Practical ways to cut everyday costs using discounted gift cards at the pump and beyond.
Smart Tips to Save Money When Refinancing Your Home Loan — How to reduce your biggest regular expense by shopping around for better loan terms.
Parliament of Australia (2025). Supermarket Prices and Supplier Relationships. 🔗
e61 Institute (2024). Consumer Inertia and Supermarket Competition. 🔗
ACCC (2025). Supermarket Pricing Inquiry Final Report. 🔗
