Albanese Government to Enforce Mandatory Code on Supermarkets

The Albanese government has made a groundbreaking move by signalling its intention to transform the Food and Grocery Code of Conduct from a voluntary agreement into a mandatory rule for major supermarket chains, including Woolworths, Coles, Metcash, and Aldi. This change comes with the potential for severe penalties if these supermarkets exploit their market dominance to unfairly treat suppliers.

During his budget announcement, Federal Treasurer Jim Chalmers addressed the financial pressure Australian families face at grocery stores, which is part of a broader effort to tackle the cost of living crisis. “We are empowering the competition watchdog to hold supermarkets accountable and making the Food and Grocery Code mandatory,” Chalmers declared in Parliament.

In January, the government tasked former federal Labor minister Craig Emerson with reviewing this code. By April, Emerson’s preliminary report recommended making the code mandatory and imposing fines that could reach up to 10% of annual sales for significant violations, aiming to protect suppliers better.

Chalmers has strongly indicated that the government plans to adopt this crucial suggestion. For over a decade, the voluntary code has governed interactions between food and grocery suppliers and leading supermarkets. Making this code mandatory will establish a stricter regulatory presence.

This initiative is part of a broader regulatory crackdown on big supermarket players, Woolworths and Coles, which includes a Greens-led Senate inquiry into their influence on pricing and market competition. Additionally, in February, the Australian Competition and Consumer Commission (ACCC) was directed to conduct a year-long investigation into supermarket pricing and competition to ensure fair pricing for Australian consumers.

The government has funded the consumer advocacy group CHOICE to further empower shoppers to produce quarterly price comparison reports over the next three years. The first of these reports is expected at the end of June.

The 2024 budget outlines an allocation of $8.9 million over four years, starting in 2023–24, to enhance the monitoring of supermarket pricing practices through the ACCC inquiry and CHOICE’s reporting on supermarket prices. This financial commitment underscores the government’s dedication to ensuring transparency and fairness in the grocery sector, helping Australians make better-informed decisions when shopping for food and groceries.

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