Retail price gouging should be made illegal and divestiture laws are needed to break up Australia's supermarket duopoly, according to a landmark senate inquiry report released on Tuesday.
The Greens-led Senate Select Committee on Supermarket Prices Inquiry report made 14-recommendations designed to tackle the price of food and reign in the power of Coles and Woolworths through increased competition, new legislation and strengthened regulations.
The inquiry was called to investigate supermarket pricing practices on struggling households in the context of a national cost-of-living crisis, but has also uncovered widespread examples of the impacts of supermarket profiteering on farmers and the sustainability of Australian fresh produce.
National Farmers Federation Horticulture chair Jolyon Burnett welcomed recommendations in the 195-page report to dramatically tighten provisions within the Food and Grocery Code and attach significant penalties for any breaches.
"The Select Committee has today reported on troubling testimony from growers, of predatory pricing practices that exploit the perishable nature of fresh produce, the imposition on growers of costs and risks outside their control, and of an almost universal fear of commercial retribution should any objections be raised," he said.
The report also suggested that the Code, which is currently voluntary, should be made mandatory and expanded to include greenlife industries and all retailers stocking food and groceries.
Greenlife Industry Australia chief executive Joanna Cave applauded the recommendation that "growers be protected from unfair trading practices via Bunnings' inclusion", saying it brought them a step closer to "a decent and equitable trading relationship" with Bunnings.
Crucially for farmers who called for increased transparency at inquiry hearings, the committee also called for the creation of a prices and competition commission to examine and monitor prices and price setting across the economy, along with requiring supermarkets to publish historical pricing data.
The report's call for divestiture powers for the supermarket sector would operate by giving the Federal Court the power to break up corporations "where a supermarket has been found to have misused their market power or engaged in unconscionable conduct".
The report also recommended that supermarkets be made to adopt mandatory standards for unit pricing, including "changes in price and size of products".
As well as standardising "discount and promotional terms, to prevent promotional material indicating a discount when one is not available".
It also said supermarkets should be forced to publish data on food waste, that the consumer watchdog be given powers to investigate land banking and unfair trading practices and additional investigations be performed into the role of multinational food manufacturers in price increases in Australia.
Greens Economic Justice spokesperson and committee chair Senator Nick McKim said the report sought to tackle issues around "profiteering that has done so much harm to the people of Australia".
"Chief amongst these is the recommendation that price gouging be made illegal," he said.
"We've heard from farmers and suppliers about how the massive market power of Coles and Woolworths is allowing them to act unconscionably.
"This would mean that corporations couldn't just arbitrarily increase prices without facing consequences from the courts.
"Without the ability to break up the duopoly, our market will remain skewed towards the interests of a few powerful players and nothing will change."
The report recommendations accord with those recently flagged by Dr Craig Emerson who is due to present his review of the Code by June 30.
An ACCC Supermarkets Inquiry is also expected to table an interim report no later than August 31 with a final report due next February.
