Major change to Woolworths and Coles supermarkets that could see shelf prices slashed for hard-up families

Coles and Woolworths could be forced to sell land if it stops rival supermarkets from setting up shop, should the Liberal Party win the next election.

Australia's two supermarket giants control almost two-thirds of the grocery market, making it the most concentrated duopoly in the world and leading to higher consumer prices.

By buying up land, they effectively lock out competition, which in 2020 saw German retail chain Kaufland cancel plans to open 20 supermarkets Down Under.

Opposition Leader Peter Dutton has now vowed to potentially ban supermarket giants from buying up land to stop competitors if the Coalition won the 2025 election.

'In a particular geographic region where there was a concentration of Coles or Woolies stores, to the exclusion of those other competitors, and consumers were paying more by way of price – then I think in that circumstance, you would look at whether or not that market domination would continue,' he told reporters in Sydney on Wednesday.

'You've got a situation now where Coles and Woolies have their own property development arms, they're purchasing blocks of land so that other competitors can't build within the vicinity of their existing operations or their planned operations. 

'So, I think there's a question mark about the appropriateness of that behaviour.'

Former Woolworths chief executive Brad Banducci in February told the ABC's Four Corners program it bought land in anticipation of a new suburb development, but denied this was designed to stifle competition.

'That's not something we actively do,' he said.

'We do in some cases buy land — this is one of the pieces of land we've bought and developed — but it's not a way of trying to drive competition. 

'It'll be through, we need a store in a new area and so you'll buy some land and wait for the community to start moving into the area.' 

A Coles spokeswoman said it looked at land near growth corridors.

'There are many factors which help us determine where we purchase land to build brand new stores, including proximity to new communities and growth corridors, or the need for full-service supermarkets within existing markets,' she told Daily Mail Australia on Thursday.

'Due to regulatory and other requirements, it can take several years between purchasing land and beginning construction. 

'Once the store is operational, we generally sell the site to a landlord to allow us to invest in building new stores.'

German supermarket chain Kaufland in 2020 cancelled plans to open 20 stores across Victoria and South Australia because it was unable to find suitable sites.

'After careful and thorough consideration, Kaufland has decided to undertake an orderly withdrawal from the Australian market,' it said.

'The company will be concentrating its business on its European core markets in the foreseeable future.'

Coles and Woolworths have a combined market share of 65 per cent, making it the world's most concentrated duopoly, a Treasury consultation paper released in February said.

'Australia's small population, together with its distance from big global population centres, helps explain the high level of market concentration here, but it does confer greater market power on a small number of supermarket chains here than in most other countries,' Treasury said in its review of the food and grocery code.

By comparison, the UK's top two supermarkets Tesco and Sainsbury's have a 43 per cent market share.

In the United States, the combined top four Walmart, Costco, Kroger and Target have a 34 per cent market share.

Australia's headline inflation rate of 3.4 per cent in February was also higher than the US level of 3.2 per cent.

Bread and cereal prices have risen by 7 per cent during the past year in Australia.