Byron Kay
SYDNEY (Reuters) – Australia could impose billions of dollars in fines on major supermarket chains that fail to comply with an industry code of conduct, the federal government said on Monday, seeking to allay concerns that suppliers are being unfairly pressured over prices.
Grocers with annual revenues of more than A$5 billion ($3.3 billion) – currently Woolworths, Coles, Germany’s ALDI and wholesaler Metcash – will be forced to comply with a code of conduct that has until now been voluntary, the federal government said.
The move comes after a report by former competition minister Craig Emerson (NYSE:) found that the current code “fails to address the bargaining power imbalance between supermarkets and their suppliers, including farmers”, the federal government said.
Supermarkets face fines of up to 10% of annual turnover for violating the code, which mainly concerns relationships with suppliers. Woolworths reported Australian grocery sales of A$48 billion in 2023, Coles generated A$37 billion and Metcash generated A$10 billion. ALDI does not disclose its revenue.
“This is about making sure there’s a fair deal for families and a fair deal for farmers,” Treasurer Jim Chalmers, Agriculture Minister Murray Watt and Competition Minister Andrew Lee said in a joint statement.
The federal government will prioritize passing laws that would make the code mandatory, it said in a separate statement.
The review is one of six government investigations into the country’s supermarket sector, which commentators say is one of the most concentrated industries in the world. Woolworths and Coles, the No. 1 and No. 2 grocers, together sell two-thirds of all Australian groceries.
Representatives from Woolworths and Coles said their companies will take the report’s recommendations and the government’s response into account and are committed to supporting a sustainable grocery sector.
An ALDI Australia spokesman said the company supports the introduction of a mandatory code of conduct and is reviewing the final recommendations.
A Metcash spokesman was not available for comment.
The National Farmers’ Federation said the changes would make it easier for food suppliers to speak out when they believe a large buyer is abusing their market power to drive down wholesale prices.
“These changes should finally give the code the impact it needs to protect farmers,” said the federation’s acting director-general Charlie Thomas.
“To protect producers, we need a code with deterrents strong enough to influence behavior in the supply chain.”
A separate inquiry into consumer prices by the Australian Competition Commission is due to be published in February 2025.
($1 = 1.5074 Australian dollars)