Government floats mandatory code for Coles and Woolies
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The news: The federal government has released an interim report recommending changes to the Food and Grocery Code of Conduct, including making the code mandatory and introducing penalties for future breaches by Coles, Woolworths, ALDI and Metcash.
The numbers: The interim report provides 10 recommendations for improving the code.
It recommends that the code becomes mandatory and applies to all supermarkets with annual revenues exceeding $5 billion, including Coles, Woolworths and ALDI, and wholesaler Metcash.
Under the draft recommendations, the Australian Competition and Consumer Commission would be able to seek penalties for major or systematic breaches of up to $10 million, 10% of a supermarket's annual turnover, of three times the benefit gained from the breach — whichever is the greatest.
The context: In January, the federal government appointed economist and former Labor politician Craig Emerson to lead a review into the code, after Labor came under fire from the opposition for not doing enough on the cost of living, including criticism that supermarkets were not passing on easing prices to consumers.
The purpose of the code is to address harmful practices in the grocery industry stemming from an imbalance of bargaining power between supermarkets and their suppliers.
In the interim report, Emerson said that the existing code "is not effective". He noted that it currently contains no penalties for breaches and supermarkets can opt out of provisions by overriding them in their grocery supply agreements.
Submissions to the interim report will inform Emerson in preparing a final report, which will be provided to the government by 30 June 2024.
The source: Interim report from independent review
