Labor to Implement Mandatory Code of Conduct for Grocery Stores

June 24, 2024 TruthUSA

‘This is part of a broad suite of changes that we are implementing to make our supermarkets and our economy broadly more competitive,’ said the treasurer.

Major supermarkets and grocery wholesalers in Australia may soon be required to adhere to stricter regulations as the Labor government steps up its crackdown on the grocery sector.

On June 24, the government announced that it would strengthen the Food and Grocery Code by accepting all the recommendations of a recent independent review of the sector.

The Food and Grocery Code, which was introduced under the Competition and Consumer Act 2010, is a set of voluntary codes of conduct regulating the trading relationship between suppliers and supermarkets

While the Code sets out obligations between the parties, it contains no penalties for misconduct.

In recent years, major supermarket chains such as Coles and Woolworths have been accused of engaging in price gouging and unfair pricing practices amid the cost of living crisis and inflation.

Both companies have also been accused of using their market power to force farmers to sell produce at lower prices.

Treasurer Jim Chalmers said the latest move was all about getting “a fair go for farmers and families.”

“When it comes to the cost of living, it’s also really important that we ensure that our big supermarket chains do the right thing by their suppliers and growers and by Australians at the checkout,” he told reporters.

“This is part of a broad suite of changes that we are implementing to make our supermarkets and our economy broadly more competitive, making the Food and Grocery Code mandatory, strengthening and streamlining the mergers regime, empowering the ACCC [Australian Competition and Consumer Commission] and also funding CHOICE to ensure that there is more price transparency.”

What Will Change Under the New Measure

As the government is set to adopt all recommendations of the grocery review, it will make the Code mandatory for all supermarkets operating in Australia with an annual revenue of over $5 billion (US$3.32 billion).

This means supermarket giants Woolworths, Coles, Aldi, and food wholesaler Metcash, which owns supermarket chain IGA, would be subject to stricter requirements.

The government will also strengthen formal and informal dispute‑resolution arrangements and create an anonymous complaint mechanism within the ACCC for suppliers and whistle‑blowers.

At the same time, the Code will include penalties for harmful misconduct, with the maximum penalty either a fine of $10 million, three times the benefit gained from the contravening conduct or 10 percent of turnover in the previous 12 months—whichever is the greatest.

Other changes include measures to address the fear of retribution among suppliers.

“From time to time, whether it’s farmers or other suppliers in their relationship with the big supermarket chains, they feel like they’re getting a raw deal,” Mr. Chalmers told ABC News.

“And so this is about resolving those disputes, providing those avenues to make those issues known so that we can get to the bottom of them.”

To implement these changes, the government will need to amend the current competition laws.

While the treasurer did not give an exact timeline for the legislation, he said the government would try to introduce it as soon as possible.

“We do need to change the Competition Act to implement these changes to the Food and Grocery Code. We’ll do that when we can,” he said.

“Obviously, we will need the support of the Parliament in order to do that. But as soon as we can, we want to bed down these changes so that we can ensure that the supermarkets are doing the right thing by their growers and their suppliers and by their customers.”

In addition, Mr. Chalmers refused to give an estimate of how much prices at supermarket checkout would drop due to the legislation, saying that remained to be seen.

A man restocks trolleys at a Coles supermarket in Albany, Western Australia, on April 11, 2024. (Susan Mortimer/The Epoch Times)

Response from Other Parties

A spokesperson for Coles told The Epoch Times that the supermarket would consider the government’s announcement.

“Coles is proud to be a founding signatory to the Food and Grocery Code of Conduct. We are committed to its goals, knowing that strong, collaborative relationships with our suppliers are fundamental to our success and essential for serving our customers,” the spokesperson said.

“Coles has worked collaboratively with Dr. Emerson in his review to strengthen the Code. We will consider the final recommendations and the government’s response in detail, and we remain committed to supporting a healthy and sustainable grocery sector.”

The Epoch Times has also contacted Woolworths for comment.

Previously, the Opposition expressed support for imposing a mandatory code of conduct on supermarkets.

In April, Shadow Infrastructure Minister Bridget McKenzie said there was a need to include large multinational companies in the food business in the mandatory code.

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