Are higher prices fair or are we being gouged? Fels launches inquiry

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Skyrocketing grocery prices, higher energy bills and soaring airfares will all go under the microscope of former consumer watchdog boss Professor Allan Fels in an inquiry into price gouging.

While some price increases were connected to rising costs, Fels – who is a former chair of the Australian Competition and Consumer Commission – said that was not always the case.

A new inquiry will look at what exactly is behind price rises for everyday essentials.Credit: iStock

“It’s hard to deny that price gouging happens,” Fels said.

He said he was keen to get to the bottom of what was driving up prices for essential items across the country in the investigation that begins on Thursday and will report to the Australian Council of Trade Unions.

ACTU assistant secretary Joseph Mitchell said Fels will examine through the inquiry the effects of market concentration and pricing practices in Australia.

“Large corporations are raking in record profits while working families are feeling the pain of higher prices every time they shop at the supermarket and pay the bills,” Mitchell said.

“The price gouging inquiry is a serious examination of the practices and behaviour of some of our biggest companies, our most important industries, and if they are behaving fairly.”

Inflation began rising early last year, reaching a 30-year high of 7.8 per cent in December, pushing up the cost of everyday goods and essentials to highs not seen for decades.

Inflation has since begun to ease, but Fels said it was important to examine the impact of higher prices on Australian households and to figure out what was causing prices to increase.

“The starting point is it’s not wages that seem to be the problem, based on the fact they’re declining in real terms,” he said.

Former competition chief Allan Fels will look at supermarket pricing and energy bills, while airfares will also be examined.Credit: Alex Ellinghausen

“It’s often true that price rises are connected with costs, but not always. And how otherwise would you explain what seems to be significant rises in margins around the world?”

Where exactly in the supply chain any price gouging occurred was a big question, Fels said.

“I noticed at the supermarket some price rises that looked high, and I once called a couple of farmers I know about whether they were putting up prices. They said the opposite [was happening], they said the prices for their product had been driven down,” he said.

“That makes you think about the so-called middle person – what’s going on in the middle? And that could be retailers, but it could be the suppliers of retailers.”

Fels said his focus is on supermarket pricing and energy bills, while airfares will also be examined. Competition will be an important factor, he said.

“Lack of competition is a key driver of prices,” he said.

“There’s quite widespread opinion that competition has weakened somewhat both in Australia and globally and, if so, one would be less surprised if profit margins were rising.”

The inquiry is taking submissions from individuals and companies, and Fels will deliver an interim report by the end of the year.

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