Labor government strengthens regulations on supermarkets and grocery wholesalers in Australia
The Labor government in Australia is intensifying its crackdown on the grocery sector by implementing stricter regulations on major supermarkets and grocery wholesalers. The government has accepted all the recommendations of an independent review of the sector and plans to strengthen the Food and Grocery Code. The Code, which is currently voluntary, regulates the trading relationship between suppliers and supermarkets but lacks penalties for misconduct.
Price gouging and unfair pricing practices by major supermarket chains like Coles and Woolworths have been a cause for concern in recent years. These companies have also been accused of leveraging their market power to force farmers to sell produce at lower prices. Treasurer Jim Chalmers emphasized the importance of ensuring a fair deal for farmers and families when it comes to the cost of living.
To make the Food and Grocery Code more effective, the government will make it mandatory for all supermarkets with an annual revenue over $5 billion. This includes supermarket giants such as Woolworths, Coles, Aldi, and food wholesaler Metcash. The government will also strengthen dispute-resolution arrangements and create an anonymous complaint mechanism within the Australian Competition and Consumer Commission (ACCC) to address concerns and protect suppliers and whistle-blowers.
Under the new measure, the Code will include penalties for harmful misconduct, with the maximum penalty being a fine of $10 million, three times the benefit gained from the misconduct, or 10 percent of turnover in the previous 12 months, whichever is the greatest. These changes aim to address the fear of retribution among suppliers and provide avenues for resolving disputes.
Amending the current competition laws will be necessary to implement these changes. While a specific timeline for the legislation was not provided, the treasurer expressed the government’s intention to introduce it as soon as possible, pending parliamentary support. The impact on supermarket prices remains uncertain, as the treasurer did not offer an estimate.
Coles, one of the major supermarket chains, expressed its commitment to the goals of the Food and Grocery Code and stated that it would consider the government’s announcement. Coles highlighted the importance of strong, collaborative relationships with suppliers for its success and serving customers. Woolworths, another major supermarket chain, has not yet commented on the government’s announcement.
The Opposition has previously shown support for a mandatory code of conduct on supermarkets. Shadow Infrastructure Minister Bridget McKenzie stressed the need to include large multinational companies in the food business in the mandatory code.
Overall, the government’s decision to strengthen regulations in the grocery sector aims to ensure fair practices, protect suppliers, and promote a competitive market. By making the Food and Grocery Code mandatory and introducing penalties for misconduct, the government aims to address issues of price gouging and unfair pricing practices. The implementation of these changes will require legislative amendments, and the impact on supermarket prices remains uncertain. However, this move is seen as a step towards creating a healthier and more sustainable grocery sector.
