From April 1, next year, the Australian federal government will make the Food and Grocery Code of Conduct compulsory, aiming to reshape the dynamics between major grocery retailers, wholesalers, and their suppliers.
This decision follows an independent review led by Craig Emerson, which highlighted significant power imbalances within the sector. The revised code is designed to create a fairer playing field, ensuring suppliers are treated more equitably by large retailers and wholesalers.
One key focus of the mandatory code is tackling “shrinkflation” – the practice of reducing product sizes without lowering prices. Additionally, the government plans to overhaul planning and zoning laws to foster greater competition and address the issue of land banking, where prime retail land is left unused.
To strengthen these measures, the government is enhancing Australia’s merger framework and providing additional resources to the Australian Competition and Consumer Commission (ACCC). The ACCC will receive new funding to crack down on misleading pricing tactics in the supermarket and retail industries.
A key feature of the code’s implementation is the introduction of a confidential reporting pathway, allowing suppliers and whistle-blowers to raise concerns with the ACCC without fear of retaliation.
Further reinforcing these changes, the government has passed the Fairer for Families and Farmers Bill. This legislation imposes stricter penalties on large retailers and wholesalers who breach the code. Offenders will face penalties of up to $10 million, three times the value of the benefit gained, or 10 per cent of their turnover in the previous 12 months – whichever is greater.
These measures mark a significant shift in the regulation of Australia’s grocery sector, demonstrating the government’s commitment to creating a more competitive and transparent retail environment that benefits both consumers and suppliers.
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