Australia | The independent review of the Food and Grocery Code of Conduct, which could result in multi-million dollar penalties, has gained the support of the Federal Treasurer.
Federal Treasurer Jim Chalmers said he wanted a fair go for Australian families and a fair go for farmers. Following the release of the Food and Grocery Code Review interim report, Chalmers said it would ultimately make the Australian supermarket industry as competitive as possible so consumers could get the best prices. Following extensive stakeholder engagement, the interim report recommended the Code be made mandatory, with heavy penalties for major breaches.
The proposed mandatory code would enable the ACCC to take supermarkets to court and seek penalties of either up to AUD $10 million, or 10 percent of the company's annual turnover, or three times the value of the benefit from the breach. There are currently no penalties for breaches, and because the Code is voluntary, supermarkets can walk away from it at any time.
The report highlighted a heavy imbalance of market power between smaller suppliers and supermarkets, which has warranted a strong and effective code. The report recommends that the mandatory Code apply to grocery retailers and wholesalers with revenue of $5 billion or more per annum, which would capture the current signatories – Aldi, Coles, Woolworths, and Metcash.
Review author Dr Craig Emerson opposed the idea of introducing divestiture powers into Australian law, as suggested by some politicians.
“If forced divestiture resulted in a supermarket selling some of its stores to another large incumbent supermarket chain, the result could easily be greater market concentration,” Dr Emerson said.
“Further, if these smaller chains were not interested, or were not in a position to buy, these stores would be forced to close. This would be at the cost of the jobs of the workers in those stores and of inconvenience to local shoppers who would need to go elsewhere to buy their groceries.”
Chalmers said the review found that smaller suppliers’ fear of retribution was a major obstacle to the use of the Code.
"It makes recommendations to strengthen protections for complaints, including new channels for making informal complaints and access to independent dispute resolution."
The Interim Report of the independent review led by Dr Craig Emerson will be out for consultation until 26 April 2024.
The review has been an important part of the Albanese Government’s big and broad competition reform agenda, which has focused on an ACCC inquiry into supermarket prices, a $1.1 million boost in funding for supermarket price monitoring by CHOICE, and a comprehensive review of the nation’s competition policy settings with a focus on easing the cost of living for middle Australia.
To read about the NZ supermarket duopoly click here.
