AUSTRALIA – The Australian government has introduced a bill in parliament aimed at protecting suppliers from mistreatment by imposing potentially billion-dollar fines on large supermarket chains that fail to adhere to an industry code of conduct.
The Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Bill 2024 proposes that the maximum fines will be “the greater of” A$10 million, “three times the value of the benefit gained from the contravening conduct,” or 10% of the previous year’s turnover.
According to the Albanese Government, these are the “highest corporate penalties under any industry code.”
Penalties for alleged breaches of the code will also increase. If the Australian Competition and Consumer Commission (ACCC) has “reasonable grounds,” it can issue infringement notices as part of the bill.
The legislation follows accusations from politicians and farmers that the largest supermarket chains are using their scale to stifle competition, mistreat suppliers, and overcharge customers, allegations that the companies deny.
“We’re cracking down on supermarket misconduct because it will help shoppers at the register and farmers and suppliers at the negotiating table,” Assistant Treasury Minister Andrew Leigh said in a statement.
A government-commissioned report in April emphasized that enforcing obligatory rules is “essential” to address the “heavy imbalance in market power” between Australia’s top grocers – Woolworths, Coles, Metcash, and Aldi – and their suppliers.
Regulations for a new mandatory Food and Grocery Code of Conduct will be established this year, with enforcement beginning on 1 April 2025.
Market analysts argue that Australia’s supermarket sector is one of the most concentrated in the world, with Woolworths and Coles together selling two-thirds of all groceries.
Australia’s Minister for Agriculture, Fisheries and Forestry, Julie Collins, said: “This is about getting a fair go for families and farmers.
The Albanese Labor Government knows how vital our agriculture sector is to Australia and the Australian economy. Our farmers produce exceptional, high-quality food and deserve to be on a level playing field with supermarkets.”
This latest initiative is part of the government’s broader strategy to promote fairness and equitable opportunities for families and farmers.
The bill includes a provision that the ACCC will be notified of every merger in the supermarket sector. To bolster enforcement, the ACCC will receive an additional A$30 million in funding.
Calls to give the country’s antitrust regulator powers to break up supermarket giants Woolworths and Coles to improve competition, as fruit and vegetable farmers have not seen prices rise for 15 years, were rejected in a government-commissioned report earlier this year.
Coles, Metcash, and ALDI told Reuters they supported the mandatory code of conduct, as did Woolworths, which referred a request for comment to the Australian Retailers Association (ARA). The ARA also supported the code.
“Positive supplier relations are a key priority for our members, as is value for money for consumers,” said the ARA’s chief industry affairs officer, Fleur Brown, in a statement to Reuters.
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