The ACCC Supermarket Inquiry: What It Found About Australia’s Grocery Duopoly

Two Australians in every three grocery dollars shop at Coles or Woolworths, and for a decade that concentration was treated as a settled fact. The inflation of 2022 to 2024 changed that, because rising prices made the question of who captures the margin politically urgent. What followed — a twelve-month inquiry running alongside separate Federal Court proceedings — produced the most detailed public account of Australian grocery economics ever assembled. This article summarises what it found and what it did not do.

Why did the inquiry happen?

Because grocery prices rose sharply while both major supermarkets reported strong profits, and the public drew the obvious inference. Consumer trust research showed both retailers falling from among Australia’s most trusted brands to among its most distrusted within months, with “tricky pricing” and a perceived focus on profits over customers cited as the main drivers.

The ACCC had not conducted a comprehensive grocery inquiry since 2008, and the market had changed substantially in the interim — online had emerged, own brand had expanded enormously, and the independent sector had shrunk. The government directed the ACCC to examine competition, pricing practices, supplier relationships and outcomes in remote communities.

The evidence base was unusually large: more than 20,000 consumer survey responses, over 100 public submissions, eight supplier roundtables, and extensive data obtained under compulsory powers. That scale matters because most claims about supermarket margins had previously relied on anecdote.

What did the ACCC actually conclude?

That the sector is an oligopoly in which the two majors face limited competitive pressure to constrain pricing behaviour, producing worse outcomes for consumers and suppliers than a more competitive market would. Average product margins at the majors increased over the five financial years examined, and profitability compared favourably with international supermarket peers.

Importantly, the finding was about market structure rather than illegality. Nothing in the inquiry alleged collusion between the majors, and the ACCC was explicit that it does not regulate supermarket prices. The concern was that a structure with two dominant players and a shrinking independent sector produces weak price competition without anyone breaking the law.

The supplier findings were equally significant. Suppliers described asymmetric bargaining power, unpredictable trading terms and reluctance to complain for fear of losing shelf space — the classic pattern in any market where a handful of buyers control access to consumers. Several recommendations targeted transparency in supplier dealings specifically for that reason.

What were the key recommendations?

On consumers, clearer and more consistent pricing information: standardised unit pricing, minimum information and record-keeping requirements for discount promotions, verifiable claims, and clear notification when package sizes shrink while prices hold — the practice commonly called shrinkflation.

On suppliers, greater transparency in dealings, improved information about how the majors set and change terms, and reinforcement of the Food and Grocery Code of Conduct, which moved from a voluntary arrangement to a mandatory regime with substantial penalties following a separate review.

On competition, reforms to planning and zoning laws — a recommendation that sounds technical and is arguably the most important in the report. Where an incumbent can secure sites and restrict competitor access through land holdings, restrictive covenants or planning objections, new entrants cannot reach the scale needed to compete. Fixing pricing disclosure changes behaviour at the margin; fixing site access changes market structure.

What happened in the Down Down and Prices Dropped cases?

The ACCC filed separate Federal Court proceedings in September 2024 alleging that each of Woolworths and Coles had misled consumers through discount pricing claims — 266 products across 20 months for Woolworths and 245 products across 15 months for Coles. The alleged mechanic was consistent: a stable regular price held for at least six months, a short price increase of at least 15%, then promotion at a “discount” price at or above the original.

In May 2026 the Federal Court found that Coles made false or misleading representations in 13 of the 14 sample “Down Down” tickets examined at the liability hearing. Coles introduced Down Down in 2010 and marketed it as delivering predictable, reliable reductions in the regular shelf price of commonly purchased items, which made the gap between the marketing and the mechanic particularly damaging.

The Woolworths proceeding covering “Prices Dropped” had judgment reserved at the time of the Coles decision. Class actions seeking consumer compensation have also been prepared, with their progress dependent on the outcome of the regulator’s cases.

Does the duopoly actually harm consumers?

The honest answer is that it depends on the counterfactual. Australian grocery prices are not obviously high by international standards once you adjust for a small population spread over a continent, high labour costs and long supply lines. The majors’ scale delivers genuine efficiencies, and their distribution networks reach remote communities that a fragmented market might not serve at all.

Against that, the ACCC found margins rising over five years and profitability high relative to global peers, which is difficult to reconcile with intense competition. The clearest evidence of weak rivalry is behavioural rather than numerical: two operators of similar scale that consistently move pricing and promotional strategy in parallel, and that both reacted to inflation by protecting margin rather than by attacking each other.

The structural constraint is the shrinking independent sector. The combined share of the two majors has been steady at around 65%, with ALDI gaining and the IGA network and independents losing ground. A duopoly that is stable because a third force cannot reach scale is a different problem from one that is stable because customers prefer it, and the planning and zoning recommendation is aimed squarely at that distinction. See our profiles of Woolworths and Coles for how each has responded.

How does Australia compare internationally?

Australia’s grocery concentration is high but not unique. The United Kingdom has four large chains plus hard discounters, Germany is dominated by a handful of groups including the discounters that pioneered the model, and New Zealand has an even more concentrated duopoly that has attracted its own regulatory review. The United States, with far more chains, is the outlier rather than the norm.

What distinguishes Australia is the combination of concentration with geography. A market of around 27 million people spread across a continent supports fewer national chains than a dense European market of similar population, because distribution costs are higher and the addressable population per distribution centre is lower. Some concentration is a rational consequence of that.

The regulatory conclusion internationally has been consistent: transparency and supplier codes rather than structural break-up. The United Kingdom’s Groceries Supply Code of Practice and its adjudicator provided the template that Australia’s mandatory Food and Grocery Code broadly follows. No comparable jurisdiction has forcibly divided its major grocers, which is context worth remembering when break-up proposals are raised.

What is land banking and why did the ACCC care?

Land banking is the practice of acquiring or controlling sites suitable for supermarket development without building on them, which prevents a competitor from using them. Combined with restrictive covenants on land, exclusivity clauses in shopping centre leases and objections in planning processes, it can effectively close a catchment to new entrants.

The ACCC’s interest was structural rather than punitive. Pricing transparency measures change how a market behaves at the margin; site access determines whether a competitor can exist at all. ALDI’s growth in Australia was constrained for years by site availability as much as by consumer acceptance, and a discounter that cannot open stores cannot discipline incumbent pricing.

This is why the planning and zoning recommendation is the most consequential in the report and the least likely to be implemented quickly. Planning is a state and local responsibility, involves competing objectives around amenity, traffic and community consultation, and cannot be reformed by a federal competition regulator. Recommending it was correct; delivering it requires eight separate jurisdictions to agree.

What happens next?

Implementation, slowly and unevenly. Consumer-facing measures such as unit pricing standards and discount promotion record-keeping are within federal reach and can move relatively quickly. Supplier protections largely operate through the now-mandatory Food and Grocery Code, which carries substantial penalties and gives suppliers a confidential complaints pathway.

The planning and zoning recommendations depend on state and territory governments, and there is no mechanism compelling them to act. Historically, competition recommendations requiring coordinated state reform have taken years or failed entirely, which means the recommendation most likely to change market structure is also the one least likely to be delivered.

Meanwhile the courts continue to do the work that regulation has not. The Coles liability finding and the reserved Woolworths judgment establish precedent about what a discount claim must be able to demonstrate, and follow-on class actions are prepared. For the majors, the practical constraint on promotional practice over the next few years is more likely to come from litigation risk than from the inquiry itself.

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