The Oreo family pack on sale at one of Australia’s largest grocery store chains seemed to be a pretty good deal, with a discount of 50 Australian cents. Trouble was, the new price was still a full Australian dollar more than what the cookies cost a month earlier.
And on Monday, in a rare case of legal action tied to rising prices, the Australian government sued over what regulators described as a pattern of deception used by Woolworths and Coles, the country’s duopoly of grocery store giants, between 2021 and 2023.
Gina Cass-Gottlieb, chair of the Australian Competition and Consumer Commission, issued a blistering report on alleged price and discount manipulation for hundreds of items, from butter to menstrual products and pet food to nicotine patches, all of which had their prices raised for a few days or weeks before going on sale and being part of marketing promotions. Her complaint also cited the Oreo cookies, and Australia’s beloved chocolate Tim Tams.
With all these items, she accused the two companies — ubiquitous behemoths that control 65 percent of the Australian market — of breaking consumer protection laws by “making misleading claims about discounts, when the discounts were, in fact, illusory.”
Even worse, she added: “The false or misleading representations concerned the price of household staples at a time of increasing cost-of-living pressures.”
Woolworths, the largest supermarket chain in Australia, said in a statement that it would closely review the government’s claims. Coles sounded more defensive, arguing in a statement that “the allegations relate to a period of significant cost inflation when Coles was receiving a large number of cost increases from our suppliers.”
The back and forth, with Australia seeking to make the companies pay penalties and contribute to charities to deliver food to needy families, points to just how politically radioactive inflation has become. As is true for the Biden administration in the United States, nothing has caused more consternation and criticism for Australia’s prime minister, Anthony Albanese, than the steady surge of prices for household goods and housing.
And in a country with less grocery store competition than many developed nations, where the government has a habit of responding to public outrage — just look at how quickly it restricted guns after a mass shooting — supermarkets have become a target for overhaul.
“Businesses need to do the right thing by Australians — and the Albanese government is committed to improving the food and grocery sector so it works for families and farmers,” said Andrew Leigh, the assistant minister for competition, charities, treasury and employment.
In addition to the lawsuits, the government has provided funding to conduct quarterly price monitoring, effectively keeping a close eye on prices for possible future lawsuits. Mr. Albanese, who is up for re-election next year, and his allies have also proposed a new mandatory code of conduct for the largest food retailers that would ensure that farmers receive fair payments in good-faith negotiations and subject the big chains to multimillion-dollar penalties for violations.
“We see an Australian economy that is more concentrated and less dynamic than it was in the past,” said Mr. Leigh, a former professor of economics at the Australian National University. “That’s the context in which we’ve set about doing a lot of competition reform.”
Source: nytimes.com
