Nov 27 2024: The Australian government introduced legislation on Wednesday aimed at imposing significant fines on major supermarket chains for failing to adhere to an industry code of conduct designed to prevent the mistreatment of suppliers.
The proposed bill follows allegations from farmers and politicians that leading supermarket chains exploit their market dominance to suppress competition, mistreat suppliers, and overcharge consumers—claims the companies deny.
Under the legislation, starting April next year, large retailers such as Woolworths, Coles, ALDI, and Metcash will be required to comply with a mandatory code of conduct, which has been voluntary until now. Breaches of the code could result in fines of up to 10% of a company’s annual turnover.
The code primarily governs interactions with suppliers. With reported sales of A$48 billion for Woolworths, A$37 billion for Coles, and A$10 billion for Metcash in 2023, potential fines could reach billions of dollars. ALDI’s financial data remains undisclosed.
Assistant Treasury Minister Andrew Leigh stated that cracking down on supermarket misconduct would benefit both shoppers and suppliers, emphasizing the government’s focus on fairer practices at the register and the negotiating table.
The move comes as high inflation pressures the center-left Labor government, which faces an election early next year. Australia’s supermarket sector is among the most concentrated globally, with Woolworths and Coles controlling two-thirds of grocery sales.
While calls to dismantle large supermarket chains were dismissed in a government-commissioned report earlier this year, the new legislation has received broad support. Coles, Metcash, and ALDI welcomed the mandatory code, while Woolworths referred inquiries to the Australian Retailers Association (ARA).
The ARA expressed support for the code but voiced concerns about its expanded scope, particularly regarding penalties and retribution provisions, which go beyond the original recommendations of the government’s report.
($1 = 1.5427 Australian dollars)
