The federal government has released its formal response to the Senate Select Committee on Supermarket Prices, rejecting calls for forced divestiture powers while advancing a suite of supplier protections, pricing regulations and competition reforms it says will structurally address grocery sector concentration.
The response addresses the 12 committee recommendations and additional recommendations from crossbench and Coalition senators.
On the central question of divestiture, the government was unequivocal: it does not support giving regulators the power to break up supermarket businesses, regardless of conduct.
The government pointed to three decades of competition reviews, including the Hilmer (1993), Dawson (2003) and Harper (2015) inquiries, none of which recommended divestiture as a remedy for misuse of market power.
The ACCC’s own year-long supermarket inquiry (2025) and the Independent Review of the Food and Grocery Code of Conduct (2024) reached the same conclusion.
In place of divestiture, the government is proceeding with a mandatory merger control regime that came into force on 1 January 2026, which now requires Coles and Woolworths to notify the ACCC and seek approval for all acquisitions of supermarket businesses and certain land holdings, directly targeting land banking concerns raised throughout the inquiry.
Excessive pricing ban from July
One of the inquiry’s key outcomes is a new prohibition on excessive pricing by Australia’s two largest supermarkets. Amendments to the Competition and Consumer (Industry Codes – Food and Grocery) Regulations 2024 will come into effect on 1 July 2026, enforced by the ACCC. Breaches carry maximum penalties of $10 million, three times the value of the benefit obtained, or 10 per cent of the company’s annual turnover – whichever is greatest.
The government framed this as implementing the spirit of the committee’s recommendation to legislate against price gouging under section 46 of the Competition and Consumer Act 2010, without amending the Act itself.
Food and Grocery Code now mandatory
The mandatory Food and Grocery Code of Conduct, remade on 12 December 2024 and in force from 1 April 2025, applies to all supermarkets with annual Australian revenue above $5 billion – currently Woolworths, Coles, ALDI and Metcash. The new code introduces heavy penalties for breaches, protections against supplier retribution, stronger fresh produce provisions and reinforced dispute resolution mechanisms.
The government has committed $2 million over three years from 2025-26 to fund fresh produce industry associations to educate suppliers on their rights under the code. An anonymous complaints portal has also been established for suppliers to report conduct directly to the ACCC.
A statutory review of the mandatory code must commence before 1 April 2027, and the government has confirmed it will consult on the ACCC’s recommendations relating to the code as part of that process.
On the question of whether the Dairy Code and Horticulture Code should be brought in as schedules to the Food and Grocery Code, the government declined, maintaining that the codes regulate different points in the supply chain and should remain separate.
ACCC gets $67.7m in Budget boost
The 2026-27 Budget allocated an additional $67.7 million over four years to strengthen ACCC enforcement capabilities, covering its expanded role in policing the new pricing regulations, monitoring code compliance and pursuing anti-competitive conduct. This follows more than $30 million invested through the 2024-25 MYEFO to boost investigation and enforcement activity across the supermarket and retail sectors.
Unit pricing reform under consultation
The government supports strengthening the Unit Pricing Code in principle and released a consultation paper in September 2025 canvassing options to crack down on shrinkflation, improve price display requirements, expand retailer coverage and introduce civil penalties for non-compliance. Public consultation closed on 19 September 2025, and the government is considering outcomes.
A separate consultation paper released on 20 January 2026 sought feedback on proposals to improve transparency around price trends, promotions and loyalty programs. That process closed on 17 February 2026.
The government did not support establishing a new Commission on Prices and Competition as recommended by the committee, arguing existing ACCC powers and the recently agreed ACCC supermarket inquiry recommendations are sufficient.
The Unfair Trading Practices Bill 2026 – introduced in April 2026 following agreement with states and territories – has passed the House of Representatives and is before the Senate. It targets subscription traps, hidden fees and practices that manipulate consumer decision-making.
