Monopsony in Australia: Understanding Single-Buyer Power in 2025

In economics, a monopsony is a market situation where there’s only one (or a very dominant) buyer. While most people are familiar with monopoly (one seller), monopsony flips the power dynamic: here, the buyer holds the cards. The classic example? The job market—where a single big employer dominates hiring in a region or sector.

• Labour markets: Regional hospitals, mining towns, or large supermarkets are often the only significant local employers.

• Agriculture: Big food processors or supermarket chains may be the sole buyers of farm produce in an area.

• Government procurement: Defence or infrastructure contracts often have only one major buyer: the government itself.

When buyers wield this much power, it can drive down wages, stifle small business, and limit consumer choice. And in 2025, new policy debates are heating up as regulators try to tackle these effects.

Take the case of regional Australia. In many mining towns or rural communities, there’s a single large employer—think BHP, Rio Tinto, or a major hospital. With few other job options, workers find it tough to negotiate better wages or conditions.

Recent studies by the Australian Bureau of Statistics (ABS) show that wage growth in concentrated labour markets lags behind cities with more competition. In 2025, the Fair Work Commission has flagged monopsony power as a key reason for persistent wage stagnation, especially outside metro areas.

Here’s how monopsony can affect everyday Australians:

• Lower wages: Fewer employers means less competition for workers, often resulting in lower pay.

• Limited job mobility: Workers may be reluctant to leave, fearing lack of alternatives.

• Reduced bargaining power: Unions and individuals alike have less leverage.

In response, the Albanese government’s 2025 Workplace Relations Bill proposes targeted measures to boost wage transparency and reduce the use of non-compete clauses, aiming to restore balance in these markets.

Monopsony isn’t just about wages. It can also impact what you pay at the checkout—and what choices you have.

Consider Australia’s supermarket sector. Coles and Woolworths dominate as buyers from farmers and food manufacturers. When these giants set purchase terms, smaller suppliers have little room to negotiate. This can:

• Push farmgate prices lower, squeezing producers’ margins.

• Discourage new entrants—why start a farm if you can’t get a fair price?

• Lead to higher retail prices or less variety for consumers, as smaller brands struggle to survive.

In 2025, the Australian Competition and Consumer Commission (ACCC) is expanding its remit, with new powers to scrutinise ‘buyer power’ abuses in agriculture and retail supply chains. The ACCC’s 2025 Food Supply Review is set to deliver recommendations on how to foster fairer deals for small producers and shoppers alike.

With monopsony in the spotlight, policymakers are trialling new approaches:

• Strengthening collective bargaining rights for workers in sectors with limited employers.

• Mandatory reporting of contract terms between big buyers and small suppliers, boosting transparency.

• Cracking down on unfair contract clauses, including excessive exclusivity or non-compete agreements.

Financial commentators expect further reforms as evidence mounts about the real-world impacts of monopsony. For Australians, these changes could mean more power in the workplace and fairer prices at the till.

One of the most publicised monopsony battles in Australia was the dairy industry’s standoff with supermarkets. For years, farmers struggled with low farmgate milk prices, as Coles and Woolworths set tight margins. After widespread protests and a 2024 Senate inquiry, new 2025 regulations now require transparent pricing and fair minimum contracts for dairy suppliers—offering a potential model for other sectors.