Supermarket giants to be hit with tougher code of conduct

Nation's cheapest supermarket revealed

Source: Choice

A cost-of-living crackdown on anti-competitive behaviour in the food and grocery sector is set to prompt industry change following an independent review.

The federal government has pledged to accept all recommendations of a recent probe into the Food and Grocery Code of Conduct.

“This is about getting a fair go for families and a fair go for farmers,” the government said on Sunday.

“We’re cracking down on anti-competitive behaviour in the supermarkets sector so people get fairer prices at the checkout.”

The inquiry found the voluntary code was failing to resolve the imbalance of bargaining power between supermarkets and their suppliers, including farmers.

Suppliers fear retribution from supermarkets if they raise concerns or exercise their rights under the code, according to the review.

The code is an agreement that aims to improve business behaviour across the grocery sector, particularly relating to the relationships between retailers, wholesalers and suppliers.

Suppliers are automatically covered by the code but it is voluntary for supermarkets. Industry giants Woolworths, Coles, Aldi and IGA are each signed up.

The review by former Labor minister Craig Emerson recommended making the code mandatory for all supermarkets with an annual revenue of more than $5 billion.

It will also introduce penalties for the most serious breaches of the code.

This maximum punishment would be the greatest of $10 million, three times the benefit gained from the contravening conduct or 10 per cent of turnover in the previous 12 months.

Other recommendations include strengthening dispute-resolutions, improving outcomes for suppliers of fresh produce and putting a greater emphasis on addressing fear of retribution.

It comes after many months of accusations Woolworths and Coles have been price-gouging customers and stifling competitors while undermining suppliers.

In response, the Greens earlier this year pushed a Senate bill that would introduce divestiture powers into competition law and allow the government to step in and break up food retail giants.

This could reduce Coles’ and Woolworths’ market domination and stop them from raising prices for consumers while underpaying farmers.

Implementing the recommendations will require changes to regulations and the Competition and Consumer Act 2010.

The review has been flagged as a major part of the federal government’s broad competition reform agenda. It also includes an Australian Competition and Consumer Commission inquiry into supermarket prices.

Topics: Supermarkets
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