Australia proposes mandatory code of conduct for supermarkets, millions in fines

Metcash

08/04/2024 01:51

SYDNEY, April 8 (Reuters) - Australia's major
supermarkets could face fines of up to A$10 million ($6.6
million) if suppliers and growers are not treated fairly, an
independent government review said on Monday, as it proposed to
make a voluntary grocery code of conduct mandatory.
    Under the proposed rules, supermarkets with annual revenue
of over A$5 billion will fall under the mandatory code. That
list currently includes Woolworths  WOW.AX , Coles  COL.AX ,
ALDI and Australia's largest independent grocery supplier
Metcash  MTS.AX .   
    For serious breaches, fines could be as large as
A$10 million, 10% of annual turnover, or three times the benefit
it gained from the breach, whichever is the biggest. 
        The interim government report did not recommend big
supermarket operators should be forced to divest assets to
improve competition.
    "If forced divestiture resulted in a supermarket selling
some of its stores to another large incumbent supermarket chain,
the result could easily be greater market concentration," the
report said.
    Prime Minister Anthony Albanese called it "a very strong
interim report", adding his government wanted fair prices for
both farmers and families. 
    In a Senate inquiry last month, a fruit and vegetable
farmers body said the antitrust regulator should be given powers
to break up the supermarkets, weakening their hold on wholesale
and retail prices. 
    Albanese has previously ruled out such moves, saying
Australia has a private sector economy and that "we're not the
old Soviet Union."
    Woolworths and Coles, which together ring up about
two-thirds of Australian grocery sales in one of the world's
most concentrated markets, have reported stellar profits after
two years of high inflation. Six separate inquiries into their
operations have been announced this year. 
    Coles, Woolworths and Metcash did not immediately respond to
a request seeking comments on the review.
    The interim report also proposed to strengthen protections
for suppliers against possible retribution from supermarkets if
they made a complaint to them.
    Farmers say fruit and vegetable growers typically sell to
supermarkets on weekly contracts and often accept uneconomic
offers for their produce because of concerns about missing out
on future sales due to the limited number of supermarkets. 
    Stakeholders can make submissions to the interim report by
April 30, and the final report will be submitted to the
government by June 30.                             
($1 = 1.5223 Australian dollars)

 (Reporting by Renju Jose and Byron Kaye in Sydney; Editing by
Lincoln Feast.)
 ((renju.jose@thomsonreuters.com;))