Australia's New 'Excessive Pricing' Law: Comparing Margin-Based Price Control vs. Personalized Pricing Bans

On July 1, 2026, Australia became the first nation to statutorily ban supermarket price gouging, launching a bold regulatory experiment aimed directly at the checkout aisle. The new excessive pricing prohibition, enforced by the Australian Competition and Consumer Commission (ACCC), targets the country's massive supermarket duopoly. By capping the allowable markup on essential goods, the law attempts to artificially restrain inflation at the shelf. Half a world away, US states like New York and California are deploying a completely different weapon: the One Fair Price Act. Rather than capping profit margins, these laws ban "surveillance pricing"—the use of personal data to charge different shoppers different prices for the exact same item.[1][2][4][7]

These two legislative milestones represent a fundamental divergence in how governments are trying to protect the modern shopper. As the cost of living remains a dominant political issue globally, regulators are being forced to choose between two distinct philosophies. The Australian model assumes the core problem is a lack of baseline competition, requiring state intervention to cap the profit margin. The emerging US model assumes the core problem is algorithmic exploitation, requiring state intervention to blind the pricing software. Understanding the mechanics, trade-offs, and evidence behind each approach reveals how the future of retail pricing will be governed.[8]

The Australian approach—margin-based price control—operates as an amendment to the mandatory Food and Grocery Code. It strictly targets "very large retailers" that generate more than $30 billion in annual revenue, a threshold that currently isolates only Coles and Woolworths. Under this framework, there is no fixed price ceiling for a carton of milk or a loaf of bread. Instead, the ACCC monitors whether the retail price is "significantly excessive" relative to the wholesale cost of supply plus a "reasonable margin." To enforce this, the regulator has been granted sweeping powers to demand pricing, margin, and sales revenue data directly from the supermarkets.[1][3]

The penalties for violating this margin cap are severe, designed to serve as a genuine deterrent rather than a mere cost of doing business. Corporate breaches carry maximum fines of $10 million, three times the value of the benefit obtained, or 10 percent of the retailer's adjusted annual turnover—whichever is greater. The primary argument for this approach is that it directly attacks baseline inflation in highly concentrated markets. When two companies control roughly 65 percent of the national grocery sector, natural price competition breaks down. Margin caps theoretically ensure that essential groceries cannot be marked up arbitrarily simply because the consumer has nowhere else to shop.[2][3][7]

However, the arguments against margin-based controls highlight significant economic and legal friction. The most immediate risk is the "Margin Transfer Effect." Retail analysts warn that if supermarkets face strict regulatory caps on their consumer-facing margins, they will not simply absorb the loss. Instead, they are highly likely to squeeze their upstream FMCG (Fast-Moving Consumer Goods) suppliers, demanding lower wholesale costs to maintain their absolute dollar profits without triggering the percentage-based excessive pricing alarm. In this scenario, the regulatory pressure bypasses the retailer and crushes the farmer or manufacturer.[5]

Furthermore, the evidence on enforcing margin caps suggests a looming administrative nightmare. Antitrust experts note that defining a "reasonable margin" is notoriously difficult in a court of law. Supermarket margins vary wildly by category—a 5 percent margin might be standard for dry bulk goods, while a 40 percent margin might be required to offset spoilage in fresh produce. Because the ACCC must assess pricing on a case-by-case, product-by-product basis, critics argue the law will generate years of complex litigation rather than immediate relief at the checkout register.[3][5]

In stark contrast, the personalized pricing bans gaining traction in the United States ignore the baseline margin entirely and focus on the data inputs. Laws like New York's S.B. 8623 prohibit businesses from using algorithmic systems that rely on personal data—such as income proxies, family size, location, and browsing history—to customize a price. This legislative push is a direct response to the rapid rollout of Electronic Shelf Labels (ESLs). Unlike paper tags, ESLs can be updated in milliseconds, allowing physical supermarkets to implement the kind of dynamic, individualized pricing previously reserved for airline tickets and ride-sharing apps.[4][6]

The primary argument for banning personalized pricing is the preservation of consumer trust and "price memory." When a price fluctuates multiple times a day based on who is standing in front of the shelf, consumers lose their psychological baseline for what a product should cost. Proponents argue that algorithmic bans stop predatory software from identifying captive, desperate, or less price-sensitive shoppers and exploiting their specific willingness to pay. It ensures a baseline level of fairness: the price on the shelf is the price for everyone, regardless of what the retailer's data profile suggests a specific shopper can afford.[4][6]

The argument against algorithmic bans is that they do absolutely nothing to lower the universal cost of food. A supermarket operating under a personalized pricing ban can still legally charge an exorbitant, price-gouging rate for a necessity, provided they charge every single customer that same exorbitant rate. Additionally, retail industry advocates warn that overly broad surveillance pricing bans risk outlawing legitimate, transparent loyalty programs. If a supermarket cannot use a shopper's purchase history to offer a targeted discount on baby formula, the consumer ultimately pays more.[4][8]

Despite these concerns, the legal evidence suggests that algorithmic bans are highly actionable. Unlike the subjective ambiguity of proving a "reasonable margin," proving that a retailer used a prohibited data input to alter a price is a relatively binary legal test. State attorneys general can audit the software inputs directly. This clear enforcement mechanism is why legal analysts predict that state-level bans will force national US chains to adopt a uniform, non-personalized pricing standard before the 2026 holiday season, rather than attempting to navigate a patchwork of state data laws.[4][8]

When evaluating these two regulatory frameworks, clear trade-offs emerge regarding where each tool is most effective. Margin-based price controls fit well when a market is a highly concentrated oligopoly or duopoly. In environments where a lack of competition allows retailers to artificially inflate baseline prices across the board, capping the margin is one of the few ways a government can force prices down. It is a blunt instrument designed for markets where the primary threat is universal, structural overcharging.[3][8]

Conversely, margin caps do not fit well in fragmented, highly competitive markets where natural market forces already keep baseline margins thin. In these environments, personalized pricing bans are the superior tool. Blinding the algorithm fits well when the primary threat is asymmetric data exploitation—where retailers use vast troves of consumer surveillance to extract maximum value from individual edge cases. As retail technology advances, governments will likely realize that protecting the modern shopper requires both: ensuring the baseline price is fair, and ensuring the algorithm cannot change it just for you.[4][8]