The new mandatory grocery conduct code introduced by the federal government aims to regulate supermarket chains' interactions with their suppliers, ensuring fair treatment and preventing the abuse of bargaining power. Enforced with hefty fines, the code will police unreasonable demands or threats by supermarkets on suppliers and will apply to companies with an annual revenue of $5 billion. The decision to implement this mandatory code follows a review conducted by former Labor minister Craig Emerson, who found that the voluntary code in place was not effective and lacked penalties to ensure compliance.
Dr. Emerson emphasized the importance of supermarkets treating their suppliers respectfully and not exploiting their superior bargaining power, especially over smaller suppliers. The penalties for non-compliance with the new code include fines of $10 million or three times the financial benefit of the breach. While the implementation of the code is expected to lead to a "better deal" for suppliers and enhanced competition, its impact on consumer prices at the supermarket remains uncertain. The Consumer Policy Research Centre (CPRC) sees the overhaul of the code as potentially leading to changes in negotiating and bargaining powers among supermarkets, possibly resulting in greater variety and more local options on shelves.
CEO of the CPRC, Erin Turner, highlighted that while the focus of the code is on supplier relationships, it could have indirect effects on consumers. Turner expressed hope that fairer treatment of suppliers by supermarkets might not negatively impact consumers' pockets, emphasizing the need to monitor the situation closely. Suggestions have also been made for the introduction of an "unfair trading prohibition" to prevent businesses from treating customers unfairly, addressing practices like misleading supermarket pricing and confusing specials that do not translate into real customer savings. Additionally, ongoing inquiries by the Australian Competition and Consumer Commission (ACCC) and other bodies into supermarket pricing practices reflect a growing concern over the need for fair and transparent practices in the industry.