Former Labour minister, Emerson Craig, recommended heavy fines and penalties for supermarkets who mistreat suppliers. Source: Orderinchaos, Wikimedia Commons.
Australia’s biggest supermarkets could face fines of up to $10 million after an interim review proposed to make the voluntary code of conduct mandatory.
An interim review of the Food and Grocery Code of Conduct, to be released on Monday, reports “a heavy and persistent imbalance in market power between suppliers and supermarkets in Australia’s heavily concentrated supermarket industry”.
The review, led by former Labour minister Craig Emerson, has urged the government to put steep and heavy penalties for supermarkets that mistreat suppliers.
Putting proper penalties would be “a far more credible deterrent to anti-competitive behaviour than forced divesture laws”, says Emerson.
According to the report, the current Code of Conduct was voluntary, drafted by the supermarkets themselves, and was “not effective” as supermarkets did not face any kind of penalties for breaches.
“The code contains no penalties for breaches and supermarkets can opt out of important provisions by overriding them in their grocery supply agreements,” said the report.
A senate inquiry into gouging food prices was held last month to look into the conduct of supermarket chains, who were accused of taking advantage of inflation.
The move to make the code mandatory would lead to relief for both consumers and farmers who have struggled amidst the rising costs of food and living crisis, said Prime Minister Anthony Albanese.
“This work is all about how do we make our supermarkets as competitive as they can be, so that Australians get the best deal possible whether they be the providers, or of course the consumers at the checkout,” he told ABC radio on Monday.
The report recommends the code apply to supermarkets with annual revenue of over $5 billion, which would include Woolworths, Coles, and Aldi.
Under the proposal, the Australian Competition and Consumer commission (ACCC) “would be able to seek penalties for major or systemic breaches of up to $10m, 10% of a supermarket’s annual turnover, or 3 times the benefit it gained from the breach, whichever is the greatest”.
Emerson is expected to provide a final report by 30 June.
