Government to enforce mandatory code for Coles and Woolies
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The news: The Australian government has confirmed it will enforce a mandatory Food and Grocery code of conduct on major supermarket chains, compelling them to treat suppliers fairly under the threat of substantial fines.
The numbers: Woolworths, Coles and other major supermarkets will face penalties worth the greatest of $10 million, three times the benefit gained or 10% of annual revenue, for serious breaches of anti-competitive behaviour.
Supermarkets with annual sales over $5 billion, which also includes Aldi and Metcash, must comply with the strengthened code, with Costco and Amazon potentially being covered in the future.
The context: Treasurer Jim Chalmers on Sunday said the government would accept the recommendations from a review by former Labor minister Craig Emerson.
The review had found that the current voluntary code failed to address the imbalance of bargaining power between supermarkets and their suppliers, including farmers. It also found that suppliers fear retribution from supermarkets if they raise concerns or exercise their rights under the code.
Changes to the code will mandate that supermarkets act in good faith and prohibit retribution against suppliers who complain.
The Australian Competition and Consumer Commission will oversee enforcement, with the power to issue upfront infringement notices. The regulator will also establish an anonymous supplier and whistle-blower complaints mechanism.
The source: Treasury media release
