The grocery code of conduct overhaul could mean good things for suppliers. What about Aussies at the check-out?   

Mon 24 Jun 2024
ABC News

Consumers might not feel the effects of a mandatory grocery conduct overhaul, as a peak consumer policy body says it will watch to ensure supermarkets don't pass on any flow-on costs to Australians.

The federal government announced on Monday that it would impose new obligations on supermarket chains to treat their suppliers fairly, enforced by hefty fines.

The soon-to-be-mandatory code will police unreasonable demands or threats by supermarkets on suppliers and will apply to companies with an annual revenue of $5 billion.

That includes Woolworths, Coles, Aldi and Metcash.

It was the main recommendation of a review conducted by former Labor minister Craig Emerson.

The government will adopt all of Dr Emerson's recommendations, including fines of $10 million or three times the financial benefit of the breech, for supermarkets that don't comply with the new code.

"I had to look at whether the voluntary code was doing its job — it wasn't, it had no penalties and there were no disputes raised after 2021," Dr Emerson said.

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"So what it really means is that the supermarkets will need to treat their suppliers respectfully, and not use that bargaining power, their superior bargaining power, the muscle that they have, particularly over smaller suppliers."

Dr Emerson did not indicate the recommendations in the review would mean fairer prices at the supermarket till. However, he said that the new code would offer a "better deal" for suppliers, meaning that they could compete even at lower prices.

Consumers' bottom line will be 'watched closely'
CEO of the Consumer Policy Research Centre (CPRC) Erin Tuner said while the overhaul of the code didn't' directly relate to consumer issues, it might have flow-on effects.

"If this works well, there'll be different negotiating and bargaining powers, and we hope it will just see greater variety. Local options, smaller options on your supermarket shelves," Ms Turner said.

She said that fairer prices for suppliers might not mean much for the hip pocket.

"I hope this means that large supermarkets take a fairer and likely lower cut, and it doesn't hit consumers' bottom line, but it's something we're going to have to watch closely," she said.

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Ms Turner would like to see the introduction of an "unfair trading prohibition", which could act in place of laws that currently don't exist in Australia to stop businesses from treating customers unfairly.

She said that looked like unfair pricing practices such as misleading supermarket pricing, and confusing specials that did not equal a customer saving.

In February, a report by former chair of the ACCC Allan Fels, commissioned by the peak trade union body the ACTU, found supermarkets were exploiting their market power in ways that drove up inflation and hurt Australian households.

The Australian Competition and Consumer Commission (ACCC) is also conducting its own inquiry into supermarket prices, with its interim report due to be handed to the government by the end of August.

Ms Turner said that the way supermarkets treated their customers had room to improve, and she looked forward to the multiple concurrent inquiries and reviews into grocery prices.

"We just need to make sure our consumer law stands up to powerful, large and sometimes growing corporate interests," she said.

Greens economic justice spokesperson Senator Nick McKim, who recently chaired a Senate inquiry examining the country's supermarket prices, said food and grocery prices would not come down unless price gouging was illegal and powers were created to "break up the supermarket duopoly".

"The Code of Conduct does need to be made mandatory with significant penalties, which is exactly what the Greens-led Senate inquiry into price gouging recommended," he said.

"However, it only regulates the relationship between supermarkets and suppliers, and won't bring down the cost of food and groceries."