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Updated 8 May 2026

The ACCC supermarket inquiry: what it found

The ACCC supermarket inquiry found widespread illusory discounts, supplier squeezing, and duopoly pricing power. Here is what it means for your grocery bill.

What the inquiry found

The ACCC's final report (published late 2024) exposed a supermarket system built on hidden price manipulation. Here are the key findings:

Illusory discounts

The ACCC found that both Coles and Woolworths routinely use a three-step pricing trick: raise the price 20-40%, keep it at the inflated level for a few weeks, then "put it on special" back down to the original price, displaying the inflated price crossed out and the original price as the "discount." Shoppers see the red discount sticker and think they're getting a deal. They are actually paying what they always paid, or more.

Pinch data backs this up. We found 230 products currently "on special" at Coles and Woolworths that cost more than they did a year ago. A moisturiser at Coles was normal for 16 weeks at $9.50. The shelf price was raised to $22, held there briefly, then "discounted" to $15.40 (marketed as "30% off"). The price has never actually been discounted. It's 62% higher than the genuine normal price.

Supplier squeezing

The ACCC found that Coles and Woolworths abuse their buying power to force suppliers (farmers, producers, food manufacturers) to accept prices that barely cover production costs. They've done this by demanding cost-sharing payments, dropping suppliers who don't comply, exploiting category dependencies ("you can't stock bread at Woolworths without also agreeing to our margins on milk"), and extending payment terms.

Farmers have been hit hardest. The inquiry documented cases where producers were paid less than the cost of production, or given price cuts with only weeks' notice. The ACCC concluded this conduct has made it economically unviable for many small food producers to continue operating.

Market concentration and pricing power

Coles and Woolworths together control about 65% of the grocery market. The ACCC found that this duopoly structure gives both chains the ability to maintain prices well above what competition would support. Even though Coles and Woolworths appear to "compete," they operate in a market where the threat of new entrants is low and the cost of switching is high for consumers.

The result: prices for staples are sticky and high. When Coles raises prices, Woolworths tends to follow. Both are insulated from real competition from below because smaller retailers can't match their scale, and can't easily convince farmers and producers to supply them.

What the settlements mean

Coles and Woolworths were both found to have breached consumer protection laws. Coles settled for approximately $10 million and Woolworths for approximately $12 million. These penalties were for misleading consumers about the value of discounts.

The fines are significant but not transformative. Coles and Woolworths together turned over around $100 billion a year in the years the inquiry examined. The fines are less than 0.02% of annual revenue. Both companies paid the penalty and moved on.

What changed

The Mandatory Food and Grocery Code

The federal government introduced the Mandatory Food and Grocery Code as a direct result of the inquiry. The Code applies to all retailers, wholesalers, and suppliers and sets minimum standards for:

• Transparency in pricing and cost-sharing demands
• Notice periods for price changes and supply withdrawals (usually 30 days minimum)
• Dispute resolution processes
• Minimising the use of payment delays as a negotiating tactic

The Code came into effect in late 2024. It doesn't ban anything, but it does require clear communication and good-faith negotiation. Suppliers now have recourse if a major retailer suddenly cuts prices, drops them, or demands cost-sharing without notice.

Price gouging ban (July 1, 2026)

Australia's price gouging ban came into effect on July 1, 2026. It makes it illegal for retailers to increase prices for essential goods (groceries, fuel, electricity, water) by more than 10% above the pre-crisis baseline during a "declared emergency" (natural disaster, armed conflict, health crisis).

This is a meaningful intervention but a narrow one. It only kicks in during declared emergencies, and it only covers price increases above 10%. Outside a crisis, it doesn't apply at all.

What didn't change

The duopoly structure

The ACCC inquiry didn't recommend breaking up Coles or Woolworths. No merger was reversed, no forced divestitures were ordered. Coles and Woolworths remain the two dominant chains, in control of 65% of grocery sales between them.

This is the constraint that enables everything else. As long as Coles and Woolworths control two-thirds of the market, farmers have nowhere else to go. Consumers have limited alternatives. And both chains can maintain prices that don't reflect real competitive pressure.

Hi-lo pricing cycles

Coles and Woolworths still run aggressive hi-lo pricing strategies: products cycle between inflated prices and "promotional" prices, with the cycle repeating every 4-8 weeks. The Code and price gouging ban don't prohibit this. As of May 2026, 42.3% of Coles products and 35.3% of Woolworths products are cycling between prices that differ by 15% or more.

Pinch analysis shows the normal price is often the low point of the cycle, and retailers have trained shoppers to wait for sales. This means most people are paying more overall than they would in a genuinely competitive market.

What shoppers can actually do

Check price history

The ACCC found illusory discounts because they tracked price history over months and years. You don't have to be an ACCC economist to do this. If you see a "special," ask: was this product this price six months ago? Three months ago? If yes, it's not a special. It's a normal price dressed up with a red sticker.

Shop around across retailers

Coles and Woolworths are more expensive on average than ALDI on identical staples. Woolworths and Coles prices often differ on the same products by 10-30%. Harris Farm undercuts both on produce.

You don't have to shop at one place. Pick the cheapest option for each category, or rotate between stores based on what you're buying that week.

Buy at the cycle low, not the cycle high

If a product cycles every 6 weeks between $3.50 and $5.00, wait for $3.50. Don't buy at $5.00 because there's a sticker on it. Pinch shows you the 52-week price history for every product, so you can tell whether a price is high or low relative to the full year.

Build staple awareness

The less you know about what things normally cost, the easier you are to manipulate with discount stickers. If you know milk should cost $2.80 and it's marked at $3.99 "on special," you know to walk away or check another store.

Keeping a mental (or written) baseline for 10-15 staple items you buy regularly makes it instantly obvious when prices are inflated.

The inquiry didn't fix the problem

The ACCC inquiry exposed real problems: illusory discounts, supplier squeezing, and duopoly pricing. But regulation so far hasn't addressed the core issue, which is market structure. Coles and Woolworths still control two-thirds of the market. The Code and price gouging ban are helpful at the margins, but they don't disrupt the economic advantage both chains have over suppliers and smaller competitors.

That leaves shoppers with the same responsibility they've always had: knowledge. Know what things cost. Check the history. Compare stores. Don't assume red stickers are real deals. The ACCC did the research so you don't have to guess. But you still have to act on it.