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Pharmacies, grocers face ACCC probe over ‘outrageous’ RAT price gouging

(Source: Bigstock.)

Pharmacies, c-stores and supermarkets and petrol stations are being accused of price gouging over the sale of Covid-19 rapid antigen tests (RATs), prompting a warning from the ACCC. 

In a statement issued this morning, the competition regulator said 879 complaints had been received from consumers about pharmacies overcharging for RATs, a further 283 from convenience stores, tobacconists and supermarkets, and 272 from service stations. Since December, the number of complaints has averaged around 150 a day, most from within NSW.

The ACCC said it had “significant concerns” about the retail price of rapid antigen tests, which some retailers are selling for more than $70 each. The wholesale costs range between $3.95 and $11.45 a test.

“At the extreme end, we have received reports or seen media coverage of tests costing up to $500 for two tests through online marketplaces, and over $70 per test through convenience stores, service stations and independent supermarkets, which is clearly outrageous,” said ACCC Chair Rod Sims.

“We are looking in particular at reports of single tests being sold at around $30 or above from certain stores. For example, such sales have occurred from a number of King of the Pack and Metro Petroleum stores (70 and 40 complaints respectively). However, I want to emphasise the complaints are limited to a small number of individual stores in these chains and the majority of stores in those chains have not been the subject of complaints to us. We are writing to those traders to validate the reports and asking them to explain their prices so we can work out what’s going on,” Sims said.

More than 1800 reports from members of the public have been received to date, a volume it said reflected the continued significant community interest in the pricing of RATs.

“There are several businesses that have repeatedly come to our notice thanks to the information provided by the public. We are asking those businesses to urgently explain the prices they are charging.”

Sims said the body had already contacted more than 40 test suppliers, major retailers and pharmacy chains seeking information about their costs, current pricing, and stock availability, and reminding them they need to be able to substantiate any claims they make to consumers about the reasons for higher prices.

“The supply chain is often complex, with several businesses involved from the initial supply to the retail sale of tests to consumers,” he said. “Retailers operating under the same brand or chain may be setting prices and selling tests independently of the other stores in the chain.

“This means the wholesale and resulting retail prices can vary significantly.

“Our inquiries so far confirm that a large volume of orders has been placed. However, given delays in the supply of tests, or test parts, into Australia, delays in distribution due to Covid illness or isolation requirements within workforces and at the retailer level, there is significant difficulty forecasting accurate supply,” Sims said.

“We are also aware of other individual traders named in media and social media reports and will be engaging with those that give rise to concerns.”

The ACCC is also continuing to investigate potential scams after receiving a growing number of reports relating to online stores accepting payment yet knowing they either did not intend to supply the tests or knew they would not be able to supply them in a timely manner.

“In the middle of a significant outbreak of Covid-19 in a pandemic, the excessive pricing of RATs required to diagnose the illness and protect other members of the public is of significant concern to the ACCC,” Sims said.

“Only a few weeks ago tests were readily available at most chemists and supermarkets for around $10 for a single test.

“We realise demand and supply chain issues have impacted since then, but our initial research suggests that a price of around $20 per test or more, however packaged, may be hard to justify based on the average wholesale costs, and such retailers should explain why the price is so high,” Sims said.

“Any test costing more than $30, even with supply constraints, is almost certainly too expensive and would seem to be taking advantage of the current circumstances,” he said.

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