Woolworths CEO Threatened with Prison at Senate Price Inquiry

Woolworths CEO grilled at Senate inquiry, accused of "price gouging" and threatened with jail for refusing to disclose profits. Highlights growing concerns over rising grocery prices and supermarket duopoly power.

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Bijay Laxmi
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Woolworths CEO Threatened with Prison at Senate Price Inquiry

Woolworths CEO Threatened with Prison at Senate Price Inquiry

Woolworths CEO Brad Banducci faced a grilling at a Senate supermarket price inquiry on Thursday, where he was threatened with prison for refusing to disclose the company's return on equity. The heated exchange sparked a broader debate on political diversions and inflation blame in Australia.

During the inquiry, Greens senator Nick McKim, who chaired the proceedings, accused Banducci of "price gouging" and "cherrypicking data" surrounding Woolworths' profits. When Banducci declined to reveal the supermarket giant's return on equity, citing that Woolworths focuses on return on investment and total shareholder return as more appropriate profitability measures, McKim threatened him with a six-month prison sentence or a $5,000 fine.

The inquiry also heard testimony from Coles executives, with CEO Leah Weckert acknowledging that the company had let down suppliers by underpricing the wholesale value of goods. Both Woolworths and Coles defended their practices in the face of allegations that they are "desperate to protect their reputation while gouging suppliers and customers."

Why this matters: The Senate inquiry highlights growing concerns over rising grocery prices and the market power wielded by Australia's supermarket duopoly. The heated exchange reflects the political pressure on retailers to justify their pricing and profitability amid cost-of-living pressures faced by consumers.

The supermarket industry has faced calls for a mandatory code of conduct, with potential fines of up to 10% of turnover for breaches. The inquiry recommended making the voluntary Food and Grocery Code of Conduct mandatory, with significant financial penalties. Treasurer Jim Chalmers criticized the "confected outrage" at the inquiry as detracting from the real issues, underscoring the tensions between political grandstanding and addressing the complex challenges in the grocery sector.

Key Takeaways

  • Woolworths CEO faced grilling at Senate inquiry, threatened with jail for not disclosing ROE.
  • Greens senator accused Woolworths of "price gouging" and "cherrypicking data" on profits.
  • Coles acknowledged underpricing wholesale value of goods, both retailers defended their practices.
  • Inquiry highlights concerns over rising grocery prices and market power of supermarket duopoly.
  • Calls for mandatory code of conduct with significant penalties for breaches in the industry.