The barrage of inquiry-induced implicit threats may be just the tonic the government was hoping for when, with little or no evidence, it began its assault on supermarkets last year.

The inquiries may find no smoking guns that point to profit gouging but as Macquarie equities suggest, practices such as high-low pricing (where a firm initially charges a high price for a product and then subsequently decreases the price through promotions, markdowns) or member pricing could come under pressure.

They must get ahead of potential regulatory changes or invest in their brands by lowering prices.

Goldman Sachs says that the expansion of Woolworths’ margin isn’t the result of price gouging, rather the scaling up of its online business and the growth of its media business, but notes if the inflation-driven higher costs of doing business can’t be recovered though pricing, margins will be impacted and Woolworths’ earnings could be lowered by up to 11 per cent in 2025.

Macquarie fears that supermarket trading terms with its suppliers may be another area that supermarkets become vulnerable.

Thanks to the lack of clarity around what the supermarkets are being accused of, or what may be teased out by these inquiries, it is particularly difficult to guess how they will pan out.

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In 2008, an Australian Competition and Consumer Commission inquiry into supermarkets found the industry was “workably competitive” although made recommendations at the margins – the most significant of which involved the barriers to entry for new competitors because the existing supermarkets had better access to superior sites.

But Goldman noted that in 2008 the inquiry didn’t dampen Woolworths’ earnings growth and during the following years of the global financial crisis both supermarket groups performed well.

Back then Woolworths’ share price also came under significant pressure, only to rebound after the 2008 inquiry finished.

Coles and Woolworths understand the current stakes are high and have garnered a legion of advisers. Woolworths has hired Albanese’s former chief of staff, Michael Choueifate, to head its strategy war room and Coles has recruited SEC Newgate Australia chairman Brian Tyson to navigate its path through the minefield of inquiries.

It’s a dangerous period ahead.

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