Coles and Woolworths on the brink of $10 million fines with new rule change
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In a move that could significantly alter the landscape of Australia's supermarket industry, Coles and Woolworths, along with other major players, may soon find themselves under much stricter regulations.
A recent report recommended that the Food and Grocery Code, a voluntary scheme, be made mandatory. Breach of the code could result in fines of up to $10 million.
This change is not just a minor tweak but a seismic shift that could have far-reaching implications for the way these supermarket giants do business.
The proposed rule change is part of an interim report released by the government following a review led by Dr Craig Emerson, a former Competition Minister.
The review found that the current voluntary code was not effectively regulating the relationship between supermarkets and their suppliers, with a significant imbalance in market power heavily favouring the supermarkets.
Under the new recommendations, supermarkets with annual revenues exceeding $5 billion—which includes Coles, Woolworths, and ALDI—would be subject to the mandatory code.
‘A heavy imbalance in market power between suppliers and supermarkets in Australia's heavily concentrated supermarket industry necessitates an enforceable code of conduct,’ he stated.
The Australian Competition and Consumer Commission (ACCC) would be empowered to enforce the code, with the ability to levy fines that could reach $10 million, 10 per cent of a supermarket's annual turnover, or three times the benefit gained from the breach, whichever is greater.
The review's findings highlighted a pressing need for a more enforceable code of conduct to protect suppliers who may fear retribution and thus compromise the effectiveness of any regulations.
Treasurer Jim Chalmers expressed the government's desire for a 'fair go for families and a fair go for farmers'.
He said: ‘This work is all about making our supermarkets as competitive as they can be so Australians get the best prices possible.’
As households grapple with high food prices, accusations have been levelled at Woolworths and Coles for price-gouging, stifling competition, and undermining suppliers.
The report suggested that an effective and mandatory code of conduct, along with the ACCC's enforcement of competition laws and policy reforms related to planning and zoning, could enhance competition in the industry.
However, the review stops short of endorsing the forced break-up of supermarkets, warning that such a move could lead to less competition, job losses, and inconvenience for local shoppers.
This stance aligns with the government's position against the forcible break-up of supermarket chains, with Prime Minister Anthony Albanese previously stating that the government is not akin to the Soviet Union.
The final recommendations from Dr Emerson's review are expected by the end of June, and Treasurer Chalmers is set to outline the government's plans for reforms designed to boost competition in the economy in an upcoming speech in Sydney.
You can watch an interview with Dr Emerson here:
Source: The Project/YouTube
How do you think these changes will impact the supermarket industry and your shopping habits? Will this lead to fairer prices and better treatment of suppliers, or are there potential downsides to consider? Share your thoughts in the comments below!
A recent report recommended that the Food and Grocery Code, a voluntary scheme, be made mandatory. Breach of the code could result in fines of up to $10 million.
This change is not just a minor tweak but a seismic shift that could have far-reaching implications for the way these supermarket giants do business.
The proposed rule change is part of an interim report released by the government following a review led by Dr Craig Emerson, a former Competition Minister.
The review found that the current voluntary code was not effectively regulating the relationship between supermarkets and their suppliers, with a significant imbalance in market power heavily favouring the supermarkets.
Dr Emerson recommended that the Food and Grocery Code should be made mandatory for supermarkets. Image source: Shutterstock
Under the new recommendations, supermarkets with annual revenues exceeding $5 billion—which includes Coles, Woolworths, and ALDI—would be subject to the mandatory code.
‘A heavy imbalance in market power between suppliers and supermarkets in Australia's heavily concentrated supermarket industry necessitates an enforceable code of conduct,’ he stated.
The Australian Competition and Consumer Commission (ACCC) would be empowered to enforce the code, with the ability to levy fines that could reach $10 million, 10 per cent of a supermarket's annual turnover, or three times the benefit gained from the breach, whichever is greater.
The review's findings highlighted a pressing need for a more enforceable code of conduct to protect suppliers who may fear retribution and thus compromise the effectiveness of any regulations.
The rule change would also affect ALDI. Image source: Shutterstock
Treasurer Jim Chalmers expressed the government's desire for a 'fair go for families and a fair go for farmers'.
He said: ‘This work is all about making our supermarkets as competitive as they can be so Australians get the best prices possible.’
As households grapple with high food prices, accusations have been levelled at Woolworths and Coles for price-gouging, stifling competition, and undermining suppliers.
The report suggested that an effective and mandatory code of conduct, along with the ACCC's enforcement of competition laws and policy reforms related to planning and zoning, could enhance competition in the industry.
However, the review stops short of endorsing the forced break-up of supermarkets, warning that such a move could lead to less competition, job losses, and inconvenience for local shoppers.
This stance aligns with the government's position against the forcible break-up of supermarket chains, with Prime Minister Anthony Albanese previously stating that the government is not akin to the Soviet Union.
The final recommendations from Dr Emerson's review are expected by the end of June, and Treasurer Chalmers is set to outline the government's plans for reforms designed to boost competition in the economy in an upcoming speech in Sydney.
You can watch an interview with Dr Emerson here:
Source: The Project/YouTube
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