Treasury Releases Draft Code to Regulate Supermarket Giants

Woolworths and Coles supermarket signage in Melbourne, Australia on March 13, 2024. Asanka Ratnayake/Getty Images

The Australian government has invited stakeholder feedback on its draft regulations that promise to improve competitiveness in the supermarket sector.

The Competition and Consumer (Industry Codes—Food and Grocery) Regulations 2024 propose several key changes, including making the Food and Grocery Code of Conduct mandatory, enhancing dispute resolution processes, addressing supplier concerns, and introducing significant penalties for breaches, according to a statement issued by Treasury on Sept. 23.

These amendments, which follow former MP Craig Emerson’s independent review, aimed at creating a fairer playing field between suppliers and retailers like Coles and Woolworths.

The consultation period is open until Oct. 18, 2024, for the proposed amendments to the Competition and Consumer Act 2010.

ACCC Alleges Discounts Are Not Substantive

The draft was released the same morning as an announcement by the Australian Competition and Consumer Commission’s (ACCC) to take legal action against Woolworths and Coles

Australia’s two largest supermarkets are alleged to have breached Australian Consumer Law by promoting “illusory” discounts on 500 everyday products.

According to the ACCC, these products were sold at regular long-term prices for at least six months, often longer, before being subjected to price increases of at least 15 percent for short periods.

Then the supermarkets are alleged to have included these products in their promotional “Prices Dropped” and “Down Down” marketing campaigns.

ACCC Chair Gina Cass-Gottlieb has sought penalties including requiring both supermarkets to fund a charity that delivers meals to Australians in need on top of existing programs.

The Australian Greens criticised the Labor government “complete inaction” on corporations.

“These supermarket giants have been caught exploiting consumers under the cover of high inflation, and using fake discount claims to rake in profits,,” Greens Economic Justice Spokesperson Senator Nick McKim said in a statement.

“This is exactly why the Greens have introduced bills to the Parliament to crack down on corporate price gouging and break up the supermarket duopoly.”

Part of Ongoing Process

In April, Emerson issued an Interim Report on the matter and proposed eight key recommendations, including making the Code mandatory with penalties exceeding $10 million for serious breaches.

The ACCC would enforce this mandatory code, which could seek substantial penalties based on a supermarket’s annual turnover or the benefits gained from breaches.

He suggested a confidential complaint mechanism for suppliers afraid of retaliation against complaints of price gouging from the supermarkets.

While supported by numerous stakeholders, including the ACCC and various farmer groups, some critics argue that reliance on lengthy court actions could jeopardise small suppliers.

Emerson proposed low-cost mediation and arbitration options to resolve disputes, focusing on ensuring fair agreements and greater transparency.

Emerson was appointed the reviewer in February 2024, and Prime Minister Anthony Albanese called it a move to tackle the cost of living in Australia.

“Supermarkets have a duty to make sure they’re providing affordable options for all Australians, especially when they’re making savings on their own costs,” Albanese said.

On Sept. 23, Nationals Leader David Littleproud criticised the government’s delay to releasing the Interim Report.

“The Labor government was due to receive the ACCC’s interim report into Australia’s supermarket sector by 31 August and today ACCC Chair Gina Cass-Gottlieb confirmed the interim report had been provided to them,” he said in a statement.

“Labor needs to urgently release this interim report to allow full transparency on supermarket conduct.”