Supermarket giants in Australia are facing the possibility of $10 million fines as the Labor government proposes a mandatory code of conduct to address concerns of misconduct and price gouging. The interim report released by the government highlights the ineffectiveness of the current voluntary Food and Grocery Code of Conduct in managing supermarket behavior. Former Labor Minister Craig Emerson, who led the review, recommends imposing a mandatory code on all supermarkets with annual turnovers above $5 billion, which would include major companies like Woolworths, Aldi, Coles, and wholesaler Metcash.
The mandatory code would grant the Australian Competition and Consumer Commission (ACCC) the power to enforce penalties on entities that breach the code. The proposed penalties include fines up to $10 million, three times the value of the benefit from the breach, or 10 percent of the company’s annual turnover for serious violations. Lesser violations would result in fines of around $187,800. Additionally, the code would introduce “Code Mediators” to help resolve disputes between supermarkets and suppliers and enhance protection against retribution from supermarkets.
Prime Minister Anthony Albanese emphasizes the need for a fair and competitive supermarket sector that benefits both consumers and suppliers. He acknowledges the lack of confidence in the current voluntary code and believes that a mandatory code is necessary to address the power imbalance between supermarkets and suppliers.
Both major supermarket chains, Coles and Woolworths, have expressed their commitment to the objectives of the code of conduct. Coles affirms its dedication to delivering value to customers while maintaining strong relationships with suppliers. Woolworths supports making the code mandatory and believes it should apply to all large retailers and wholesalers of groceries. They argue that this would improve public trust and create a level playing field for retailers and wholesalers.
Although supporting stricter rules, the report advises against breaking up supermarket chains through forced divestiture, as it could worsen competition issues. Breaking up chains without finding suitable buyers could lead to market concentration and job losses. The report recommends a mandatory code as a better way to protect the interests of suppliers.
Opposition Leader Peter Dutton criticizes Coles and Woolworths for non-competitive behavior but points out that the current cost of living crisis is a result of the Labor government’s policies. He highlights the government’s energy policy and high spending as contributing factors to inflation rates.
The proposed mandatory code of conduct aims to address concerns of misconduct and price gouging in Australia’s supermarket sector. By imposing fines and introducing dispute resolution mechanisms, the code seeks to create a fair and competitive environment that benefits both consumers and suppliers. While supermarket giants express their commitment to the code, there are debates surrounding the effectiveness of forced divestiture and the government’s role in inflation rates. Overall, the implementation of a mandatory code is seen as a vital step towards ensuring fairness and transparency in the supermarket industry.
