Supermarket Pricing Crackdown: What Suppliers Need to Know

What is new?

Much to the average consumer’s surprise, sudden price hikes or “price gouging” is not currently illegal in Australia. Typically, businesses are free to set their prices provided their conduct isn’t otherwise anti-competitive and any explanations given for price increases are not false or misleading. This all changed on 11 December 2025 when the Government passed the Competition and Consumer (Industry Codes – Food and Grocery) Amendment (Supermarkets Excessive Pricing Prohibition) Regulations 2025.

These new laws are part of the Government’s efforts to crackdown on “supermarket price gouging to help Australians get a better deal at the checkout”[2]. Whilst it was the Government that pushed for these laws, it will be the ACCC that will enforce them when they come into effect on 1 July. The ACCC Chair has already publicly announced that the regulator will be ready to challenge supermarkets if they don’t change their pricing practices.

The new laws introduce three key obligations for major supermarkets:

1. Notification of “very large retailers”

The new pricing laws will apply to “very large” retailers carrying on supermarket businesses in Australia. A retailer will be considered to be “very large” if the total revenue of the retailer and its related bodies corporate exceeds $30 billion in a financial year. Currently, only Coles and Woolworths meet this criteria. Aldi, Costco and Amazon are off the hook, for now. Having said this, supermarket retailers are obliged to notify the ACCC if anything changes and they become or cease to be a “very large retailer”.

2. Prohibition on “excessive pricing”

The key prohibition introduced by the new laws prevents “very large retailers” from supplying or offering to supply grocery products to consumers at “excessive prices”. Of course, the critical issue will be: what is “excessive pricing” and how will it be determined?

The revised Code sheds some light by stating that pricing will be “excessive” if it “…is significantly excessive when compared to the cost to the very large retailer of the supply, plus a reasonable margin”. Of course, this in itself raises further difficult questions as to:

• quantifying the direct and indirect costs for retailers of supplying a particular product; and
• establishing what is a “reasonable” margin for retailers to earn.

The Code doesn’t prescribe how excessive prices are to be determined, but the explanatory materials explain the following two-step approach is intended:

• The first step involves identifying a benchmark price

  The benchmark price represents the price a retailer may be able to charge if faced with “workable competition.” It could be determined by comparable market prices (e.g. the same product in a different location or time-period where competition is effective) or via a cost-plus approach (e.g. the costs of supplying the product plus a reasonable return taking into consideration market dynamics, risks, investment and capital costs).

• The second step involves comparing the benchmark price against the actual price

  In this analysis, the actual price would be considered excessive if it is “significantly and persistently” above the benchmark over a “sufficient period”.[3]

The above approach has already sparked debate with critics warning that it is ambiguous and uncertain and omits safeguards central to other overseas models where, for example, excessive pricing regulation forms part of the approach to abuse of market power. Establishing fair benchmark prices will be the challenge for the ACCC as it is tasked with monitoring changing margins amidst constantly changing supply-demand dynamics, particularly in the current climate.

Despite the challenges of these the laws, the stakes will be high for retailers as a breach of this prohibition may incur penalties up to $10 million, three times the value of the benefit derived or 10% of the company’s turnover during the preceding 12 months.

3. Retention of “pricing information”

In addition to the prohibition on excessive pricing, the revised Code will impose significant new record keeping obligations on very large retailers requiring them to keep “pricing information” for at least three years.

“Pricing information” is defined very broadly and will include:

• all product-related information (including retail price, brand, size, weight, volume etc);
• the retailer’s costs and sales records, including revenue and direct and indirect costs; and
• information given by suppliers, including information in relation to payments, discounts, rebates, allowances or other financial benefits.

The broad scope of “pricing information” means that a large majority of the communications and arrangements between suppliers and retailers will be caught. Of course, the intention of these obligations is to support the enforceability of the “excessive pricing” prohibition by ensuring that the ACCC can obtain the records it needs to make an assessment in relation to “excessive pricing”.

Why do these changes matter for suppliers?

Whilst suppliers are not directly regulated by these new laws, they should expect some knock-on effects as Coles and Woolworths ready themselves to defend their pricing if and when they come under more fire from the ACCC. This may include:

• heightened pressure to provide increased cost transparency and greater potential scrutiny of input costs, including via audits or data requests;
• changes in retailer promotional and discounting pricing practices, particularly where such practices have been supported by higher margin goods of the same or similar kind;
• reduced ability for suppliers to increase prices in the absence of clear evidence justifying the change; and
• supplier’s being forced to become part of the compliance chain in creating the paper trail necessary to justify retailer pricing.

Whilst the true impact of these laws remains to be seen, suppliers should be on the look-out for the ripple effects of this new compliance burden for retailers.