Coles and Woolies Could Face $10 Million Fines Under New Code of Conduct

Supermarket giants Woolworths and Coles could pay billions of dollars in fines under a new, mandatory code of conduct that protects food suppliers like farmers and family businesses from mistreatment.

An interim review of the ACCC’s Food and Grocery Code of Conduct today revealed business recommendations that aim to restructure “a heavy imbalance in market power between suppliers and supermarkets” in Australia.

First introduced in 2015, the code of conduct aims to improve standards of business behaviour in the food and grocery sector.

Former Labor Trade Minister Craig Emerson, who led the review, suggested that the revamped code of conduct be made compulsory, and breaches of the policy be met with fines greater than $10 million, 10 per cent of a company’s turnover or three times the benefit gained from the breach. Minor breaches would be set at $187,800.

“The existing Food and Grocery Code of Conduct is not effective,” the report said.

“It contains no penalties for breaches and supermarkets can opt out of important provisions by overriding them in their grocery supply agreements,”

“I firmly recommend the Code be made mandatory and apply to all supermarkets with annual revenues exceeding $5 billion, which at present are Coles, Woolworths and ALDI, and wholesaler, Metcash. The Code should be strengthened to better protect suppliers, with new protections against retribution, since suppliers’ fear of retribution compromises the Code’s effectiveness.”

For Coles, who reported a turnover of over $40 billion in the last financial year, a fine of 10 per cent equals $4 billion. Woolworths reported a turnover of $48 billion, ALDI reported $12 billion, and Metcash reported $9.6 billion.

In the report, Emerson said his suggestions are a “quick, low-cost dispute-resolution pathway” for suppliers, advocating for an anonymous complaints process to be established.

“I have sought to achieve the best of both worlds – a tough penalty regime for systemic bad behaviour but mediation and arbitration which, if agreed by the supermarkets under the constitution, would do most of the work to resolve complaints.”

Treasurer Jim Chalmers said the review was a necessary step in the right direction for the government’s competition reform agenda, which also included an ACCC inquiry into supermarket prices, a rise in funding for supermarket price monitoring led by Choice, and a review into competition policy settings.

“We want a fair go for families and a fair go for farmers,” he wrote in a press release.

“This is all about making our supermarkets as competitive as they can be so Australians get the best prices possible.”

Emerson’s total of eight recommendations will not change between now and the report’s final handover on June 30, but three recommendations – including the handling of low-cost dispute resolutions – are still to be finalised.


Adele is the Junior Writer & Producer for VICE AU/NZ. Follow her on Instagram and Twitter here.

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