Tuesday, May 21, 2024

Interim report on Grocery Code calls for harsher penalties

The interim report of the Review of the voluntary Food and Grocery Code of Conduct was released yesterday (8 April).

Independent Reviewer Dr Craig Emerson announced eight firm recommendations, including that the Code be made mandatory, with penalties of $10 million or more for serious breaches.

The Report makes a further three recommendations on which stakeholder views are sought.

The mandatory Code would be enforced by the ACCC. For serious breaches, the ACCC would be empowered by parliament to seek penalties from the courts of up to $10 million, 10% of a supermarket’s annual turnover, or three times the benefit it gained from the breach, whichever is greatest.

Penalties for less serious breaches would be up to 600 penalty units, which at present is $187,800.

Mr Emerson says making the Code mandatory is essential to deal with the heavy imbalance in market power between the major players – Coles, Woolworths, ALDI, and Metcash – and their smaller suppliers.

“The voluntary Code of Conduct has no penalties, leaving the competition watchdog chained up on the back porch” he says.

The interim report also makes firm recommendations to strengthen protections for suppliers against possible retribution from supermarkets.

“A new mechanism for making confidential complaints to the ACCC would be of great value to suppliers fearful of retribution from supermarkets if they made a complaint to them,” says Mr Emerson.

His support for making the Code mandatory is shared by the ACCC, former ACCC Chairs Rod Sims and Allan Fels, the National Farmers’ Federation, AUSVEG, Australian Dairy Farmers, the Australia Chicken Growers’ Council, Fresh Markets Australia, and 16 other stakeholders.

Dr Emerson points out that getting a better deal for smaller suppliers is also in the interests of supermarket customers.

“An effective Code of Conduct would benefit consumers through greater choice and better prices by enabling suppliers to innovate and invest in modern equipment to provide higher‑quality products at lower cost,” he says.

Stakeholders are invited to make submissions to the interim report by 30 April. The Final Report will be provided to the government by 30 June.

Retailers respond

Australian Retailers Association (ARA) CEO Paul Zahra says the crucial role that supermarkets play in supporting domestic suppliers and farmers ​is ​integral to the success of the Australian economy and employment, particularly in regional Australia.

“Coles and Woolworths​ ​ensure​ all Aussies have access to quality local produce every single day,” he says.

“We support Dr Emerson’s push for a fair and competitive market​,​ but it’s important to strike a balance that drives innovation while protecting the interests of all parties involved.

“With rising business costs, it’s imperative to keep our ​grocery sector ​highly competitive and profitable to safeguard local jobs and economic stability.

“Failure in this sector will have far-reaching consequences. If our ​grocery sector f​ail​s​, the impact will be felt down the line.

“Our members are already signatories of the voluntary Code of Conduct and understand the importance of fair and transparent business practices.

“Independent mediators will provide both supermarkets and suppliers with a fair and efficient means of resolving issues, ultimately benefiting consumers through improved product availability and affordability.

“The ARA looks forward to engaging with the government on the recommendations outlined in Dr Emerson’s interim report to deliver value for both retailers and consumers.”

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