Australian supermarket giants risk multimillion-dollar fines if they fail to comply with a mandatory code of conduct monitoring their ties with their suppliers.
The Albanian government has announced its support for the findings of a review designed to offer farmers and homeowners a better pricing solution.
But despite widespread concerns about competition at rival retailers including Bunnings, Chemist Warehouse and Endeavor Group, Dan Murphy’s parent company, the review’s final report due to be published on Monday has rejected calls to expand coverage. of the code to cover such stores.
Led by former Labor Minister Craig Emerson, the review was tasked with investigating relationships between supermarkets and suppliers governed by the Grocery Code of Conduct after public outcry that retailers were failing to pass on savings to shelf prices. , leaving consumers and producers baffled.
While Australia’s big four supermarket retailers – Woolworths, Coles, Aldi and IGA parent Metcash – were already signatories to the code, it remains voluntary since its creation in 2015, and Dr Emerson found a significant power imbalance between retailers and their suppliers.
Supermarket giants will have to comply with a mandatory code of conduct monitoring their links with their suppliers.
The review’s findings are designed to give farmers and householders a better price deal. Pictured, shoppers outside Coles.
In response, the review recommends that the code be made mandatory, while penalties for serious breaches of the code should also be increased to the greater of $10 million, 10 percent of turnover in the previous 12 months, or three times the benefit derived from a default.
A fine equivalent to 10 per cent of a large supermarket’s turnover would likely amount to the largest corporate breach in Australian history.
For example, Woolworths is expected to record a turnover of $50.4 billion this year, meaning the retailer risks incurring a fine of more than $5 billion for the code changes.
Minor violations of the renewed code would carry a fine of $187,800.
But the recommendations fell short of calls to extend the code’s coverage to other sectors that also face allegations of abuse of market power, even as the review flagged competition concerns in other parts of the economy.
“The review considers that the Code should not be extended beyond supermarkets to cover other retailers,” the inquiry’s final report said.
“This is not to say that these markets are working well for all players in those markets.”
The review recommended that the Code not be extended beyond supermarkets to other Australian retailers.
Similarly, Dr. Emerson declined to amend the code to offer greater protections to wine producers from major liquor retailers, and the report argued that alcoholic beverages did not fall under the definition of edibles.
However, with no agreements in place to address market power imbalances between winemakers and retailers, the review suggested further research in this area.
“The Department of Agriculture, Fisheries and Forestry could continue work to examine the relationship between wine producers and retailers,” the report says.
Concerns raised by producers who indirectly supplied supermarkets, such as livestock farmers who sold their products to slaughterhouses and meat processors, were also rejected.
“The Review has not received compelling evidence to justify such an expansion,” he said.
Former Labor Minister Craig Emerson’s review of the Grocery Code of Conduct recommends a massive overhaul
Instead, the review simply recommends that coverage for supermarkets with an annual turnover of more than $5 billion should be subject to the mandatory code, a threshold that would limit Woolworths, Coles, Aldi and IGA parent Metcash.
Costco, which is estimated to have annual revenue of $4.6 billion in 2024, would not meet the threshold but would likely exceed it in the future.
Confirming the government would support the recommendations of Dr Emerson’s review, Treasurer Jim Chalmers said the measures would support Labour’s wider efforts to reform competition policy and provide cost of living relief.
“Our efforts will help ensure our supermarkets are as competitive as possible so Australians get the best possible prices,” Dr Chalmers said.
“We are cracking down on anti-competitive behavior in the supermarket sector so people get fairer prices at the checkout.”
Additional recommendations from the review include the establishment of an anonymous complaints mechanism, which would allow providers to raise any issues directly with the ACCC.
According to the report, dispute resolution mechanisms between supermarkets and their suppliers should also be improved.
Treasurer Jim Chalmers said Emerson’s report was part of the government’s focus on improving the supermarket sector for consumers and producers.