Supermarket giants put on notice amid ‘shrinkflation’ crackdown

Major supermarkets could soon face harsh penalties after the Federal Government announced tough new measures to crack down on shrinkflation.

Shrinkflation, when a product is sold for the same price though its size has been reduced, has seemingly become all too common on supermarket shelves, raising eyebrows among consumers who are struggling with the cost of living.

In an effort to ensure shoppers get a fair deal at the checkout, Prime Minister Anthony Albanese said the Government is putting shrinkflation in their sights as they crack down on supermarkets “who do the wrong thing”.

“Tackling ‘shrinkflation’ through stronger unit pricing and new penalties is part of our plan to get a better deal for Australians,” Albanese said.

“We are also making changes to make sure the ACCC is a tough cop on the beat, while also encouraging more competition and making sure there are significant consequences for supermarkets who do the wrong thing.”

In addition to taking aim at shrinkflation, the Government has introduced the following measures to ensure best practices among the major supermarkets:

• Provided the ACCC with a $30 million boost to crack down on market conduct that pushes up cost-of-living pressures for Australians, like misleading and deceptive pricing practices and other unconscionable conduct by supermarkets and retailers.
• Commenced consultation on a new mandatory Food and Grocery Code, adopting all recommendations of Dr. Craig Emerson’s review.
• Banned unfair contract terms and increased penalties for breaches of competition and consumer law and delivering progress on the most significant merger reforms in Australia in almost 50 years.
• Commenced work with the states and territories to revitalise National Competition Policy, including on planning and zoning for supermarkets
• Supported CHOICE to release its second Albanese Government-funded price monitoring report, giving Australians accurate data on where to get the cheapest groceries.

Assistant Treasurer Stephen Jones said the Albanese Government knows Australians are struggling with the cost of living and won’t accept businesses taking advantage of consumers.

“Misleading practices around pricing are illegal and completely inappropriate. The bar needs to be raised significantly,” the Assistant Treasurer said.

“Australian consumers deserve fair prices, not dodgy discounts. That’s why we’ve empowered the ACCC to act in the interests of consumers and crackdown on dodgy practices immediately.”

The Government’s announcement comes after the Australian Competition & Consumer Commission (ACCC) recently announced it was taking Woolworths and Coles to court over alleged “misleading claims” to consumers regarding discounts on their products.

The ACCC launched legal action in the Federal Court against Woolworths Group Limited and Coles Supermarkets Australia Pty Ltd on Monday, September 23.

The ACCC alleges that both retailers increased prices of products by 15 per cent for brief periods before placing them in Woolworths’ Prices Dropped promotion and Coles’ Down Down promotion at prices lower than during the price spike but higher than, or the same as, the regular price.

ACCC Chair Gina Cass-Gottlieb said the two major supermarkets allegedly “breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory”.

“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products. However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price,” Cass-Gottlieb said.

“We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory.

“We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price.”

-with AAP.