Inquiry into price gouging – full report released

Today marks the release of the Inquiry into Price Gouging and Unfair Pricing Practices. The final report summarises the findings of the Inquiry chaired by Professor Allan Fels AO – former chairman of the Australian Competition and Consumer Commission (ACCC).

The report shines a spotlight on the experiences of everyday Australians trying to make ends meet in the ongoing cost-of-living crisis.

Pricing practices exacerbating the cost-of-living crisis

The report – which you can read in full here – spells out the role big business has played in worsening the cost-of-living crisis, deliberately driving up prices to fatten their profit margins.

There have been numerous examples of big business raking in record profits over the past year.

In 2023, we saw Coles and Woolworths post profits of $1.098 billion and $1.62 billion respectively, earning themselves a shared top spot in this year’s Shonky Award by Choice, for cashing in during a cost-of-living crisis.

ANZ also hit the gold mine alongside other big banks, recording a profit of $7.4 billion, just as mortgage stress hit an all-time high.

But it’s not just supermarkets and the big banks making mega profits, and the report identifies other sectors – including early childhood education, aviation and electricity – where a lack of competition is resulting in hugely inflated prices and profit margins.

This kind of price gouging is lawful, but far from being moral.

Simply put, there is no set of current government policies that regulate excessive prices and market environments characterised by ineffective competition, vulnerable consumers, and exploitative business pricing practices.

Stories from the front-line of the cost-of-living crisis

The report is notable because it places the experiences of everyday Australians front and centre.

This is by design – because it is everyday Australians who are bearing the brunt of the cost-of-living crisis.

For many Australians, the past year hasn’t been an easy one, especially as the cost of essential items such as housing, food and petrol have continued to rise.

Price gouging driving up inflation

One of the core take-aways from the report is that business pricing practices have added significantly to inflation in recent times.

While the tactics big businesses have used to hike prices are varied, the common denominator is that they’ve been able to get away with it because they operate in low-competition environments.

Here are just some of the common tactics the report uncovers:

• excuse-flation: otherwise known as Greedflation, where businesses have used general inflation – resulting from global factors such as the Covid-19 pandemic and Russia’s invasion of Ukraine – to raise prices without justification and to keep them higher for longer.
• confusion pricing: where businesses establish byzantine pricing structures that make it almost impossible to make price comparisons, reducing competition.
• drip pricing: where businesses only advertise part of a product’s price and reveal other prices later throughout the buying process.
• ‘rockets and feather’ pricing: where prices rise like a rocket as costs rise, but are incredibly slow to fall (like a feather) when conditions ease.
• loyalty schemes: a low-cost means of retaining and exploiting customers with schemes that are of dubious benefit and often poorly run.

You can read about these tactics and more in the full report.

A strengthening of competition law is a solution that would force business to compete on price, and would be a step towards a fairer balance of power between business and consumers.

Navigating the cost-of-living crisis

The Price Gouging Inquiry report proposes a number of recommendations, including specific recommendations for problematic industries.

There are signs already that as the cost-of-living crisis drags on, both everyday Australians and Government are starting to pay attention to where the price increases are coming from.

Just last month the Albanese Government asked the ACCC to investigate pricing in the supermarket sector – an announcement that came just a few days after Professor Fels wrote to Treasurer Jim Chalmers outlining key recommendations from the report.

Union members will always be at the forefront of holding big business to account when they prioritise profits over the health and well-being of workers and, in this case, the Australian public too.

Join your union today and be a part of the solution.