Coalition Supports Mandatory Code of Conduct for Supermarkets

People queue at a supermarket in Adelaide, Australia, on Nov. 18, 2020. (Brenton Edwards/AFP via Getty Images)

The Coalition has expressed support for the Labor government’s proposed mandatory code of conduct for supermarkets.

This comes after Labor released an interim report of its review into the existing Food and Grocery Code of Conduct, which suggested imposing a mandatory code on large supermarkets to protect the interest of consumers and farmers.

While the current code has provisions that govern the relationship between supermarkets and suppliers, it exists on a voluntary basis and contains no penalties for misconduct.

However, things would be different under the proposed mandatory code, as it would grant the Australian Competition and Consumer Commission (ACCC) the power to impose fines on violators.

Specifically, companies can be fined up to $10 million (US$6.6 million) or 10 percent of the annual turnover for serious breaches and 600 penalty units (around $187,800) for lesser violations.

On April 9, Shadow Infrastructure Minister Bridget McKenzie said there was a need to expand the coverage of the recommendations in the report.

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“We’ve been calling for a mandatory code into supermarkets for a very long time,” she told Nine News.

“Obviously our suppliers, as small businesses and particularly our primary producers, need a better deal and some security when dealing with the big supermarkets.

“We’ve got large multinationals in the supermarket ring who aren’t captured. So I'd like to see this expanded over time.”

The report recommended applying a mandatory code on supermarkets with an annual turnover of $5 billion (US$3.3 billion), effectively covering a small number of supermarkets and wholesalers such as Woolworths, Coles, Aldi, and Metcash.

Ms. McKenzie’s remarks echoed the concerns of supermarket giant Woolworths, which believed that the code should apply to all large retailers and wholesalers of groceries.

“The Code should apply to all major retailers operating in Australia, including global retail giants such as Amazon and Costco, who have global revenues many times the size of Australian supermarkets, as well as to large Australia retailers such as Bunnings and Chemist Warehouse who also compete in grocery categories, including everyday needs such as household products and personal care,” a Woolworths spokesperson said.

Coalition Working on Divestiture Powers

At the same time, the shadow minister provided an update on the Coalition’s work on a proposed legislation to introduce divestiture powers into Australian competition laws.

Divestiture power enables authorities to force companies to strip themselves of assets, such as stores and brands, in certain situations.

“So last week in Sydney, [Opposition Leader] Peter Dutton and myself both spoke separately at the small business conference and were very, very clear with those small businesses that divestiture power … is something that the Coalition will absolutely be taking to the next election.”

While the Coalition has not publicly shared details of the legislation, Ms. McKenzie stated that there would be “more to say in coming weeks and months.”

Meanwhile, the Greens Party are working on a separate piece of legislation that could empower the ACCC and the court to break up large corporations if they gain too much market power.

While the Greens target supermarkets with its legislation, the proposed bill could have a broader impact as it could be used against businesses in other sectors.

The Greens’ proposal has attracted harsh criticism from the business community, which considered it an “extreme” and ineffective measure to deal with the current cost of living crisis.

Meanwhile, Prime Minister Anthony Albanese rejected the idea of breaking up supermarket chains, saying that Australia was “not the Soviet Union.”