Prime Minister Anthony Albanese has extended an invitation to the Emirati retail chain LuLu Group to establish operations in Australia, aiming to enhance competition in the supermarket sector. This announcement came during Albanese's visit to the United Arab Emirates, coinciding with the implementation of a new free trade agreement between the two nations.

Albanese confirmed the invitation to LuLu Hypermarket chairman Yusuff Ali, highlighting the chain's extensive presence in the Middle East, which includes over 250 outlets. "One of the great things about the [LuLu Group] chairman's company, there are 300 supermarkets just like this one. I have encouraged him to come to Australia as well," Albanese stated. He emphasized the need for increased competition in the Australian supermarket landscape, which has been dominated by major players Coles and Woolworths.

The Prime Minister noted that the free trade agreement would eliminate tariffs on nearly all Australian exports to the UAE. This agreement is expected to facilitate greater investment from the UAE's substantial sovereign wealth funds into Australia. Albanese remarked, "This company is big enough to have direct relations with [Australian] producers, whether they be mango producers, the orange producers, the meat producers that the chairman met in Mudgee that are still providing Halal-certified meat into this market."

The Australian supermarket sector has faced scrutiny over rising product prices amid cost-of-living pressures. A recent report from the Australian Competition and Consumer Commission (ACCC) indicated that Coles and Woolworths have a "limited incentive" to compete aggressively on price due to their market dominance. While the ACCC found that the two major supermarkets are more profitable than their global counterparts, it stopped short of labeling grocery prices as excessive.

Critics have raised concerns about the concentration of the supermarket sector, arguing that it leads to distorted pricing and reduced competition. In response, the Coalition proposed measures to break up Coles and Woolworths if they were found to be engaging in anti-competitive behavior, a suggestion that also received support from the Greens. However, Albanese dismissed this idea, stating that Australia is "not the old Soviet Union" and that he would not forcibly dismantle the supermarket giants.

Instead, the government is exploring ways to foster competition among grocery retailers. This includes consultations with states and territories to revise zoning and planning laws, which could open up more locations for new stores. Foreign competitors have previously claimed that existing chains have hindered their market entry by acquiring potential sites without developing them.

In March, the competition watchdog's review concluded that Coles and Woolworths had little motivation to lower prices due to their dominant market positions. Despite this, Albanese committed to investigating an "excessive pricing regime" that would empower the competition watchdog to penalize supermarkets found to be engaging in price gouging. This initiative aims to ensure fair pricing practices in the Australian grocery market.