CANBERRA (Reuters) – Australia’s government introduced a bill to parliament on Wednesday that would impose potentially multi-billion-dollar fines on immense supermarket chains that fail to follow an industry code of conduct ensuring they do not mistreat suppliers.
The legislation comes in response to accusations from politicians and farmers that major supermarket chains utilize their scale to stifle competition, mistreat suppliers and overcharge customers – allegations the companies deny.
Large grocery stores, including market leaders Woolworths and Coles, as well as German ALDI and wholesaler Metcash, will be obliged to comply with the code of conduct from April next year, which has so far been voluntary.
The legislation would impose fines of up to 10% of annual turnover for breaches of the code, which mainly relate to dealings with suppliers.
Woolworths reported Australian food sales of A$48 billion ($31 billion) in 2023, while Coles had A$37 billion and Metcash had A$10 billion. ALDI does not disclose its results.
“We are cracking down on supermarket misconduct because it will help shoppers at the checkout and farmers and suppliers at the negotiating table,” Andrew Leigh, deputy chancellor of the exchequer, said in a statement.
High inflation lowered the support rating of the center-left Labor Party government before the elections scheduled for early next year.
Commentators say the Australian supermarket sector is one of the most concentrated in the world. Woolworths and Coles together sell two-thirds of all groceries.
Calls to break up immense chains were rejected in a report commissioned by the government earlier this year.
Coles, Metcash and ALDI have said they support a mandatory code of conduct. Woolworths referred a request for comment to the Australian Retail Association (ARA), which said it also supported the code.
“Positive supplier relationships are a key priority for our members, as is value for money for consumers,” ARA chief industry officer Fleur Brown said in a statement to Reuters.
But the association expressed concerns that the code went beyond the recommendations in the government-commissioned report, “particularly in the areas of individual penalties and retaliation provisions,” it said.
($1 = 1.5427 Australian dollars)
