The voluntary Food and Grocery Code of Conduct, established in 2014, proved ineffective at regulating supermarket behaviour, with Dr Craig Emerson's review finding no disputes had been raised after 2021 due to the absence of meaningful penalties.

In response, the Albanese Government has introduced a mandatory code through the Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Bill 2024, which will take effect from 1 April 2025. The reform applies to companies with annual revenue of $5 billion, including Woolworths, Coles, Aldi and Metcash.

At the core of these reforms is a recognition that the voluntary system failed to address the significant power imbalance between major supermarkets and their suppliers, particularly smaller businesses and farmers. The new mandatory code introduces substantial penalties and enhanced protections to ensure fair treatment of suppliers.

Key Changes Include:

For Supplier Protection:

• Creation of an anonymous supplier and whistle-blower complaints pathway through the ACCC

• Strengthened dispute resolution mechanisms

• Protection from retribution by supermarkets

• Enhanced bargaining power protections for suppliers

For Enforcement:

• Maximum penalties for serious breaches set at the greater of $10 million, three times the benefit gained, or 10% of annual turnover

• Enhanced ACCC powers to issue infringement notices

• Additional $30 million in ACCC funding to address deceptive pricing practices

• Mandatory notification of all supermarket sector mergers to the ACCC

For Oversight:

• Statutory review of the code brought forward to 2027

• New requirements for supermarkets to act in good faith

• Enhanced internal dispute resolution processes

• Mandatory Code Arbiter appointments by supermarkets

These reforms represent the highest corporate penalties under any industry code in Australian law. The Government states these measures will help ensure supermarkets are as competitive as possible so Australians get the best prices, while protecting suppliers from unfair treatment.

[1] https://minister.agriculture.gov.au/collins/media-releases/mandatory-food-and-grocery-code-of-conduct
[2] https://www.abc.net.au/news/2024-06-24/grocery-code-of-conduct-update-consumer-costs/104014300
[3] https://ministers.treasury.gov.au/ministers/andrew-leigh-2022/media-releases/mandatory-food-and-grocery-code-conduct-established-law
[4] https://oia.pmc.gov.au/sites/default/files/posts/2024/06/Final%20Report%20-%20Food%20and%20Grocery%20Review%202024.pdf