It looks like supermarkets may be finally facing some consequences to their actions.
The federal government this week introduced Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Bill 2024.
The Bill is primarily aimed at ensuring that supermarkets will face multi-million-dollar penalties for harmful breaches of the Food and Grocery Code of Conduct.
The Bill provides that the maximum fines that can be prescribed under the Food and Grocery Code will be the greater of:
- $10 million
- three times the value of the benefit gained from the contravening conduct, or
- 10 per cent of turnover in the preceding 12 months.
Highest corporate penalties
The proposed penalties are the highest corporate penalties under any industry code.
This Bill will also increase infringement notice penalties for alleged code breaches. The Australian Competition and Consumer Commission (ACCC) can issue infringement notices where it has reasonable grounds to believe that a supermarket has breached the code. This is important tool in the ACCC armoury that allow for efficient, low-cost enforcement outcomes for minor breaches so court costs would be avoided.
“We want a system that locks in substantial multi-million dollar penalties for bad conduct from supermarkets,” said assistant minister for Competition, Charities and Treasury, Andrew Leigh.
“We’re cracking down on supermarket misconduct because it will help shoppers at the register, and it will help farmers and suppliers at the negotiating table.
More competition
“When the Food and Grocery Code was established by the former Coalition Government in 2014, it was set up as a voluntary code. When it was reviewed in 2018, the former Coalition government decided that it should remain a voluntary code.
“More competition means a more dynamic and competitive economy.”
The move is in response to a review earlier this year of the voluntary Food and Grocery Code of Conduct that made several recommendations including:
- improving outcomes for suppliers of fresh produce.
- making the code mandatory
- strengthening dispute‑resolution arrangements
- addressing supplier fears of retribution
- introducing penalties for breaching the code
The new mandatory Food and Grocery Code of Conduct will come into force from 1 April 2025. The previous voluntary code was widely regarded as a toothless tiger and contained few, if any, legally enforceable clauses.
Opposing view
New South Wales’ Member for Calare Andrew Gee spoke in opposition of the new code in parliament.
He said “the major players” were already signed up and making it mandatory would not make a difference.
“The food and grocery Code of conduct is not worth the paper it’s written on,” he said.
“It has not stopped the price gouging and it has not stopped the damage that is being inflicted on farmers and consumers all around our country.”
Coles, Metcash and ALDI have expressed their support for the mandatory code of conduct. Woolworths deferred comment to the Australian Retailers Association (ARA), which also backed the code.
Bad press
The proposed legislation comes after years of bad press for the major supermarket chains including several inquiries including the government and the ACCC, vocal consumer dissatisfaction over questionable pricing tactics and dramatically increasing prices, and class actions against Coles and Woolworths over pricing.
Coles and Woolworths have previously blamed price increases on suppliers.
Do you think the new fines will make a difference to supermarket price tactics? Why not share your thoughts in the comments section below?
Also read: Could this ‘new’ player break the supermarket duopoly?
