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Harmful breaches of the Food and Grocery Code of Conduct could lead to substantial fines for supermarkets that mistreat their suppliers if a bill introduced to parliament yesterday is passed, putting a dent in the power of a concentrated industry with the threat of fines equivalent to 10 per cent of a retailer's annual revenue.
The code was originally voluntary under the Competition and Consumer Act 2010, but arbiters that enforce it have been widely regarded as toothless tigers with few negative consequences for grocery retailers if they treat suppliers poorly.
The Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Bill 2024, if passed, will make the code mandatory, coming into force from 1 April 2025.
The Federal Government claims the bill will ensure penalties for treating suppliers poorly in breach of the Code is not merely a cost of doing business.
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.
In a statement, Minister for Agriculture, Fisheries and Forestry, Julie Collins, and Assistant Minister for Competition, Charities, and Treasury, Andrew Leigh, describe the serious penalties as the "highest corporate penalties under any industry code".
"This Bill will also increase infringement notice penalties for alleged breaches of the Code. The Australian Competition and Consumer Commission can issue infringement notices where it has reasonable grounds to believe that a supermarket has breached the Code," the ministers state.
"These are an important tool in the Australian Competition and Consumer Commission armoury that allow for efficient, low-cost enforcement outcomes for minor breaches."
They add the new code will still help to "ensure our supermarkets are as competitive as they can be so Australians get the best prices possible".
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The bill is part of the government's competition policy agenda to improve the lot of suppliers and farmers, which also includes the following:
- cracking down on shrinkflation by strengthening the Unit Pricing Code to make it easier for Australians to make accurate and timely price comparisons
- working with the states and territories to reform planning and zoning regulations to boost competition and reduce land banking
- ensuring the Australian Competition and Consumer Commission will be notified of every merger in the supermarket sector, in the biggest strengthening of Australia’s merger settings in half a century
- providing the Australian Competition and Consumer Commission with an additional $30 million in funding to crack down on misleading and deceptive pricing practices in the supermarket and retail sectors.
"This is about getting a fair go for families and a fair go for farmers," says Collins
"Our farmers produce exceptional, high-quality food and deserve to be on a level playing field with supermarkets."
Minister Leigh says the mandatory code will crack down on supermarket misconduct "because it will help shoppers at the register, and it will help farmers and suppliers at the negotiating table".
"We want a system that locks in substantial multi-million dollar penalties for bad conduct from supermarkets," Leigh says.
"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.
"Labor’s wide ranging competition policy agenda is good for families and farmers. More competition means a more dynamic and competitive economy."
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