Coles, Woolworths, Aldi: The billion dollar fine threat facing supermarket giants which won’t be extended to Bunnings and other major retailers

Australia’s supermarket giants risk being hit with multi-billion dollar fines if they fail to comply with a mandatory code of conduct overseeing their ties with their suppliers.

The Albanian government has expressed support for the findings of a study aimed at offering better prices to farmers and householders.

But despite widespread competitive concerns at rival retailers including Bunnings, Chemist Warehouse and Dan Murphy’s parent company Endeavor Group, the review’s final report, to be released on Monday, has rejected calls to extend the code’s coverage to such stores.

Led by former Labor Secretary Craig Emerson, the commission of inquiry was charged with investigating relationships between supermarkets and suppliers covered by the Grocery Code of Conduct, following public outcry that retailers failed to pass on savings to shelf prices, causing consumers and producers were fooled.

Although Australia’s four largest supermarket chains, Woolworths, Coles, Aldi and IGA parent Metcash, had already signed the code, it has remained voluntary since its introduction in 2015, with Dr Emerson identifying a significant power imbalance between retailers and their suppliers noted.

The findings of the study are intended to provide better price arrangements to farmers and householders. The photo shows shoppers outside Coles

In response, the review recommends making the code mandatory, while also increasing penalties for major violations of the code to whichever is greater: $10 million, 10 percent of sales in the previous twelve months, or three times the benefit gained from the code. an infringement.

A fine worth 10 percent of a major supermarket’s turnover would likely amount to the biggest corporate offense in Australian history.

For example, Woolworths is expected to report sales of $50.4 billion this year, meaning the retailer is at risk of a fine of more than $5 billion as a result of changes to its code.

Minor violations of the updated code would result in a $187,800 fine.

But the recommendations did not respond to calls to expand the code’s scope to other sectors that also face accusations of abuse of market power, even though the review pointed to competition problems elsewhere in the economy.

“The review considers that the Code should not be extended beyond supermarkets and should include other retailers,” the inquiry’s final report said.

‘This does not mean that these markets function well for all players in those markets.’

The review recommended that the Code not be extended to Australian retailers other than supermarkets

Likewise, Dr. refused. Emerson to change the code to give winemakers more protection from big liquor stores, with the report claiming that alcoholic beverages did not fall within the definition of groceries.

However, with no arrangements in place to address market power imbalances between winemakers and retailers, the study suggested further research in this area.

“Further work could be undertaken by the Ministry of Agriculture, Fisheries and Forestry to investigate the relationship between winemakers and retailers,” the report said.

Concerns from producers who indirectly supplied supermarkets, such as livestock farmers who sold their goods to slaughterhouses and meat processors, were also dismissed.

“The Review has not received compelling evidence to justify such an extension,” the report said.

Former Secretary of Labor Craig Emerson’s review of the Food Code of Conduct recommends a major overhaul

Instead, the review simply recommends that cover for supermarkets with an annual turnover of more than $5 billion should be subject to the mandatory code, a threshold that would bind Woolworths, Coles, Aldi and IGA parent Metcash.

Costco, which is estimated to have annual sales of $4.6 billion by 2024, would fall below the threshold but likely exceed it in the future.

Treasurer Jim Chalmers confirmed that the government had followed Dr. Emerson’s review said the measures would support Labor’s wider efforts to overhaul competition policy and ease the cost of living.

“Our efforts will help ensure our supermarkets are as competitive as possible, so Australians get the best possible prices,” Dr Chalmers said.

‘We are cracking down on anti-competitive behavior in the supermarket sector, so that people get fairer prices at the checkout.’

One of the review’s additional recommendations is the establishment of an anonymous complaints mechanism, which would allow suppliers to report any issues directly to the ACCC.

Dispute resolution mechanisms between supermarkets and their suppliers also need to be improved, the review said.

Treasurer Jim Chalmers said the Emerson report was part of the government’s approach to improving the supermarket sector for consumers and producers