Australia to Impose Fines on Supermarkets for Unfair Practices

Australia's major supermarkets could soon face significant penalties if they fail to treat suppliers and growers fairly. An independent government review revealed on Monday proposes transitioning the current voluntary grocery code of conduct into a mandatory regulation.

According to Reuters, this change primarily targets mega-retailers with annual revenue exceeding A$5 billion, including household names such as Woolworths, Coles, ALDI, and Metcash.

The Proposed Fines and Their Impact

According to the proposed regulations, any serious code breaches could result in fines as steep as A$10 million, 10% of the company's annual turnover, or three times the benefit derived from the breach—whichever is greater.

US News reported that this stringent measure aims to ensure supermarkets engage in ethical business practices, particularly in their dealings with the growers and suppliers that form the backbone of Australia's grocery supply chain.

Rejection of Forced Divestiture

The government's interim report took a stance against forcing supermarket giants to divest assets to dilute their market dominance. "Forced divestiture could inadvertently lead to increased market concentration if divested stores are merely absorbed by other large chains," the report cautioned, hinting at the complex dynamics of market competition and consolidation.

Political and Industry Responses

Prime Minister Anthony Albanese welcomed the report as "a very strong interim report," underlining his government's commitment to ensuring fair treatment for farmers and families within the retail ecosystem. Despite calls from the agricultural sector for the breakup of large supermarkets to disrupt their influence on pricing, Albanese has previously dismissed such measures, emphasizing Australia's commitment to a privately driven economy.

Future Steps and Industry Feedback

The review also suggests beefing up protections for suppliers, safeguarding them against potential retaliation for lodging complaints. This addresses concerns among farmers about the precarious nature of their commercial relationships with large supermarkets, where the fear of losing future sales often leads them to accept disadvantageous terms.

Stakeholders have until April 30 to submit their feedback on the interim report, with the final report slated for submission by June 30. The outcomes of this process could radically redefine Australia's approach to ensuring a competitive and fair grocery market.

Photo: Nathália Rosa/Unsplash