Representation. A supermarket aisle.
Representation. A supermarket aisle.

As part of its crackdown against the anti-competitive behavior of major supermarkets, the Labor government in Australia will adopt proposals to reform the voluntary Food and Grocery Code of Conduct, including a AU$10 million fine against non-compliance of the industry code.

An independent review, which was held by former Labor minister Craig Emmerson, recommended bringing any supermarket exceeding an annual revenue of AU$5 billion under the code and imposing a fine up to AU$10 million for violations. It also added farmers and suppliers can make anonymous complaints to the consumer watchdog. Recommendations also included strengthening dispute resolutions and improving outcomes for suppliers of fresh produce, AAP reported.

Till now, the code of conduct, which was aimed at improving the business behavior across the grocery sector, automatically covered just the suppliers. Though the supermarkets were signatories to the code, it was voluntary for them.

Under the new regulation, the major supermarket chains, Woolworths, Coles, Aldi and IGA owner Metcash, will have to abide by the code.

The federal government stated it will urgently pass laws to make the code mandatory.

The government move to regulate the supermarket came after Emerson reported that the current code was "failing to address the imbalance of bargaining power between supermarkets and their suppliers, including farmers," Reuters reported.

In addition, the government has promised to create an anonymous complaints mechanism within the Australian Competition and Consumer Commission, The Guardian reported.

The report had strongly recommended a protection mechanism for suppliers, who fear retribution from supermarkets.

"Suppliers' fear of retribution has been a major obstacle to the pursuit of their rights under the code," Emerson said. "The supermarkets will need to treat their suppliers respectfully and not use that superior bargaining power – the muscle that they have – over particularly the smaller suppliers. That's really good for the suppliers, but in the same way, it's really good for the shoppers at the supermarkets, because they get lower prices and higher quality."

The National Farmers Federation stated the new regulations should encourage the suppliers to speak up when the bigger customers misuse the market power to exploit them.

Representatives for the supermarkets welcomed the government recommendations and added that they were committed to a sustainable growth of the grocery sector.

The Australian Competition and Commission inquiring into consumer pricing is expected to submit its report in February 2025.