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Australia Implements Tougher Supermarket Rules And High Penalties
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Australia is to tighten regulations on supermarkets by making a previously voluntary code of conduct mandatory and introducing new penalties.
This move comes amid concerns large grocery chains wield excessive power over smaller suppliers.
Under the new rules, the mandatory code of conduct will govern relationships between supermarkets and suppliers.
Major penalties for the most serious breaches will be introduced.
Regulators will be empowered to issue infringement notices with increased fines for code violations.
The code will apply to major supermarket chains, including Woolworths, Coles, Aldi, and Metcash.
Costco is likely to be included as it exceeds a revenue threshold.
Supermarkets worldwide have faced increased scrutiny as post-pandemic inflation has driven up prices for basic goods.
This has raised fears over potential price gouging.
The proposed changes in Australia stem from a review of the industry code conducted by Craig Emerson, a former government minister.
On Monday, Emerson released 11 final recommendations, all of which the government has agreed to implement.
"In highly concentrated markets such as Australia’s food and grocery industry, relationships can be exploited by those with substantial market power"
Emerson's review found that suppliers were reluctant to file complaints under the voluntary code due to fear of retribution from supermarkets, particularly those supplying perishable fresh produce.
The final report highlighted the highly concentrated nature of Australia's supermarket industry, with Woolworths, Coles, Aldi, and wholesaler Metcash controlling over 80 percent of the market.
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The report stated: “In highly concentrated markets such as Australia’s food and grocery industry, relationships can be exploited by those with substantial market power.
“Many food and grocery suppliers have no choice but to deal with Woolworths, Coles, Aldi, and Metcash.”
The maximum penalties for the most serious breaches of the code will be the higher of AU$10 million (US $6.6 million), three times the benefit gained from the breach, or 10 percent of the company's turnover in the preceding 12 months if the benefit cannot be determined.
Penalties for other breaches could reach up to AU$1 million.
These make them the heaviest of any industry code of conduct in Australia.
Infringement notices from regulators would carry penalties of AU$187,800.
Other government inquiries into Australia's supermarkets are ongoing, including an investigation by the competition regulator and a review by a parliamentary committee.
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