Calls for Amazon, Costco to fall under code of conduct

Treasurer reacts to interim supermarkets report

Source: X/Jim Chalmers

Grocery giant Woolworths wants global retail behemoths Amazon and Costco to be subject to the supermarket code of conduct alongside other large Australian companies.

An interim review into the Food and Grocery Code of Conduct released on Monday recommended the guidelines be made mandatory for supermarkets with yearly revenues exceeding $5 billion – which includes Coles, Woolworths and Aldi – and for any breaches to be met with up to $10 million in fines.

The code, which is aimed at improving standards of business behaviour in the food and grocery sector, has been proposed as a potential solution to prevent alleged price gouging and to reduce checkout prices.

While Woolworths is already a signatory to the voluntary code and supports making it compulsory, the company believes more retailers should be subject to its terms.

“The code should apply to all major retailers operating in Australia, including global retail giants such as Amazon and Costco, who have global revenues many times the size of Australian supermarkets,” a Woolworths spokesperson said.

“We support the recommendation to retain fast and cost-effective avenues for dispute resolution, for the benefit of suppliers, especially smaller ones.”

Hardware retailer Bunnings and pharmacy Chemist Warehouse, who compete in grocery categories such as household cleaning goods and personal care, should also fall under the code, Woolworths argued.

The grocer also supported recommendations for dispute resolution for small suppliers as they could find it daunting to deal with larger retailers.

Larger suppliers, on the other hand, were already “robust price negotiators”.

Nationals senator Bridget McKenzie said Woolworths had a point about which retailers were captured by the code.

“We’ve got large multinationals in the supermarket ring who aren’t captured,” she told Nine’s Today program on Tuesday.

“I’d like to see this expanded over time.”

Review leader author Craig Emerson agreed with McKenzie.

“Woolworths, I think, makes a good point, and that is the code to be extended should be expanded to cover rivals Amazon, Costco and even Chemist Warehouse,” he told Nine.

But ultimately, the Nationals and the Liberals wanted divestiture powers to be added into competition laws, McKenzie said.

“We’ll have more to say on that in coming weeks and months,” she said.

Emerson’s review has ruled out divestiture powers as too heavy-handed.

“This review’s recommendations to make the code mandatory, with heavy penalties for major breaches will, alongside effective enforcement of the existing competition laws, constitute a far more credible deterrent to anti-competitive behaviour than forced divestiture laws,” he wrote in his.

According to Woolworths’ submission to the grocery code review, wholesale price rises from its largest 100 suppliers accounted for about 80 per cent of all cost price increases.

During price negotiations, suppliers can withhold supply of products and were not obliged to provide justifications behind increased wholesale prices.

“In many cases, we are obliged to accept these cost price increases or face an inability to supply our customers with well-known brands,” its submission says.

Coles, Woolworths and IGA owner Metcash all said they would consider the detail of the interim report.

An Amazon spokesperson said the company was “pleased to play a role in driving competition in the general retail sector to the benefit of all Australians”.

Treasurer Jim Chalmers said the government would strengthen the code in accordance with consultation on the review, claiming it was “about a fair go for farmers and families”.

Consultation is open on the interim report until April 26. The final report will be released at the end of June.

-with AAP

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