Here we go again with the Nationals pushing for a supermarket policy that fails to support those living in rural and remote Australia.
Requiring Coles and Woolworths to sell off their stores is likely to drive grocery prices higher in regions with elevated transportation costs.
You can trust my insights on this – while I completed an extensive assessment of the Food and Grocery Code of Conduct, the Albanese government has accepted and is now acting on all its suggestions.
In my findings, I ruled out forced divestiture as a punishment for anti-competitive behavior, a stance echoed by Prime Minister Anthony Albanese.
Instead, I suggested imposing maximum fines for significant violations of the mandatory code, which could be $10 million, 10 percent of annual revenue, or threefold the advantage gained, depending on which is higher.
However, the Greens collaborated with the Coalition to push for a law mandating forced divestiture.
The determination to mandate divestment of stores should lie with the courts, not the current government or the Australian Competition and Consumer Commission. This principle stems from the need for separation of powers outlined in the Constitution.
Coles and Woolworths hold a significant share of the Australian supermarket sector, while Aldi and wholesaler Metcash, which supplies IGA stores, represent much smaller entities.
A court considering the mandatory sale of Coles or Woolworths stores would likely pose the critical question – who would potentially acquire them? How would compelling Coles to sell to Woolworths, or vice versa, resolve any issues? It would hardly enhance competition.
Proponents of forced divestiture claim that Coles or Woolworths should offload stores to foreign buyers.
But who guarantees that international supermarket brands would want to come here? There are currently no barriers keeping them from entering the market, yet for whatever reason, they seem to be avoiding it altogether.
Perhaps they find it illogical to establish a supermarket chain in Australia, so far from their origins in Europe or the US?
Maybe a formal court invitation would change their minds, but that seems unlikely.
It’s accurate to say that Aldi, a German firm, entered the Australian market at the beginning of this century and continues to grow its presence. Should Coles or Woolworths be compelled to offload some of their locations to Aldi?
Nonetheless, Aldi offers a more limited selection compared to Coles and Woolworths. While it is a favored choice, many customers do not rely solely on Aldi for their shopping, often visiting Coles or Woolworths to fulfill their needs.
If Aldi is looking to broaden its outlet presence but is hindered by strict local and state planning regulations, those laws should be amended. Restrictive and anti-competitive planning and zoning regulations are indeed part of the Albanese government's agenda for promoting competition.
IGA stores provide convenience and a personal touch, yet tend to have less variety and are generally pricier than the larger supermarket chains.
The individuals who would suffer the most from the divestiture policy enacted by the Nationals, Liberals, and Greens would be those residing in rural and remote parts of Australia.
Major grocery chains apply consistent pricing for items that do not perish. Moreover, they may also maintain the same prices for fresh fruits, vegetables, meat, and seafood across an entire state.
Essentially, customers of Coles and Woolworths in larger urban areas are indirectly supporting those living in remote regions, where transportation costs are significantly higher.
The Australian Competition and Consumer Commission’s report from February 2025, which analyzed supermarket practices, noted that “Consumer prices are largely in line with the pricing strategies of Coles and Woolworths. ”
Consequently, if a local Coles or Woolworths in a rural or remote area were compelled to divest, residents there would have to pay more for their grocery items due to increased transportation expenses.
They would no longer enjoy the financial support provided by shoppers in cities.
Community leaders in the Kimberley area of Western Australia have voiced concerns regarding the divestiture mandate.
Chris Mitchell, the shire president, mentioned that smaller grocery stores might struggle to maintain stock levels in the face of high demand if larger supermarket chains were sold. He possesses more insight than the average mayor.
The Albanese administration has pledged to make sure that the prices of 30 vital items in over 76 remote shops match those prices available to consumers in major cities.
For divestiture to proceed, the ACCC would have to suggest this action to the Federal Court. The Court would then evaluate the evidence and determine whether divesting would serve the public good, particularly benefiting the customers of the stores in question.
Residents of regional and remote Australia could only face disadvantages from the divestiture legislation being pursued by the alliance of the Nationals, Liberals, and Greens on this matter.
As a joint initiative by the Nationals and Liberals, the forced divestiture could adversely affect voters in rural and remote areas, but perhaps they believe that the appearance of strength is the only priority.
Craig Emerson served as the Minister for Small Business and the Minister for Competition Policy and Consumer Affairs during the Rudd administration.
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