Draft Code Released by Treasury to Regulate Supermarket Giants

The Australian government is seeking feedback from stakeholders on its proposed regulations aimed at boosting competition in the supermarket industry.

The Competition and Consumer (Industry Codes—Food and Grocery) Regulations 2024 include key modifications like requiring the Food and Grocery Code of Conduct to be mandatory, improving dispute resolution mechanisms, addressing supplier concerns, and introducing severe penalties for violations, as announced by Treasury on Sept. 23.

These revisions, following a review by former MP Craig Emerson, aim to level the playing field between suppliers and major retailers like Coles and Woolworths.

The consultation period for the proposed amendments to the Competition and Consumer Act 2010 is open until Oct. 18, 2024.

ACCC Alleges Discounts Are Not Substantive

The draft regulations were published concurrently with the Australian Competition and Consumer Commission’s (ACCC) announcement of legal action against Woolworths and Coles.

The two largest supermarkets in Australia are accused of violating Australian Consumer Law by offering deceptive discounts on 500 everyday items.

According to the ACCC, these products were sold at regular prices for six months or longer before experiencing price hikes of at least 15% for brief periods.

The supermarkets are accused of featuring these products in their promotional “Prices Dropped” and “Down Down” advertising campaigns.

ACCC Chair Gina Cass-Gottlieb is seeking penalties that would require both supermarkets to support a charity that provides meals to struggling Australians in addition to their current initiatives.

Part of Ongoing Process

In April, Emerson released an Interim Report and presented eight key recommendations, including making the Code obligatory with penalties exceeding $10 million for serious violations.

The mandatory code would be enforced by the ACCC, allowing for significant penalties based on a supermarket’s revenue or gains from breaches.

Emerson suggested a confidential complaint process for suppliers concerned about retaliation for reporting price gouging by supermarkets.

While endorsed by various stakeholders, including the ACCC and farmer groups, critics argue that lengthy court battles could disadvantage smaller suppliers.

Emerson proposed cost-effective mediation and arbitration options to resolve disputes, focusing on fair agreements and increased transparency.

Emerson was appointed as reviewer in February 2024, with Prime Minister Anthony Albanese emphasizing the goal of addressing the cost of living in Australia.

“Supermarkets have a responsibility to ensure they offer affordable choices for all Australians, especially when they are cutting costs themselves,” said Albanese.