Law aims to rein in grocery costs
The two big supermarket chains now face huge penalties if they charge “excessive” prices.
You may start to see a welcome change in your grocery bill this week, as laws aimed at stopping “excessive” pricing by the country’s biggest supermarket chains come into effect.
The reforms, effective from 1 July, are designed to ease cost‑of‑living pressures and improve fairness for shoppers, including seniors living on fixed incomes.
Under the new rules, it is now illegal for very large supermarkets such as Coles and Woolworths to charge prices that are considered “excessive” compared with the cost of supplying a product plus a reasonable profit margin.
The law targets retailers with annual revenues above $30 billion, meaning smaller supermarkets and independent grocers are not affected.
Assistant Minister for Competition, Andrew Leigh, said the changes are intended to protect Australians from artificially inflated grocery prices and to ensure a fairer marketplace.
The Australian Competition and Consumer Commission (ACCC) will oversee the regime and investigate potential breaches.
Penalties for doing the wrong thing are significant. Supermarkets found to be overcharging face fines of up to $10 million, three times the benefit gained, or 10% of their annual turnover, whichever is higher.
However, the legislation doesn’t determine exactly what constitutes “excessive” prices.
Nevertheless, the Federal Government says the measures are designed to discourage unfair pricing and ensure companies properly justify their costs.
Previously, Australian businesses were largely free to set their own prices.
The ACCC notes that high prices alone are not illegal if they reflect genuine costs such as wages, transport, or supply shortages.
As well as overseeing the new law, the ACCC will continue to enforce existing rules that require businesses to be truthful about pricing and not mislead customers about discounts or the reasons for price increases.
The reforms follow ongoing concerns about grocery prices and the dominance of the two major supermarket chains, which together account for most food sales in Australia.
Limited competition has been cited as one reason prices can remain high, particularly during periods of economic pressure.
For older Australians, even modest increases in grocery costs can quickly add up.
The Government says these changes are intended to provide greater confidence that the prices being charged are fair and based on genuine costs rather than excessive profit‑taking.
While the new laws are not guaranteed to bring immediate price drops, they are expected to improve transparency and accountability across the sector.
Over time, this could lead to a more balanced grocery market where shoppers feel more informed and better protected when paying for everyday essentials.
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