Emerson Inquiry Recommends Mandatory Food and Grocery Code for retailers
Source: The DairyNews
An inquiry led by former Labor minister Craig Emerson has proposed making the food and grocery code of conduct mandatory to address the significant power imbalance between suppliers and major supermarkets.
The interim report released on Monday recommends extending the mandatory code to supermarkets with annual revenues exceeding $5 billion, including Coles, Woolworths, ALDI, and Metcash.
The report highlights the need to strengthen the code to better safeguard suppliers, particularly against retribution, which compromises the effectiveness of the current voluntary code introduced in 2015. Despite some improvements in supermarkets' behavior under the voluntary code, the inquiry found that opportunistic behaviors persist.
Key recommendations include empowering the Australian Competition and Consumer Commission (ACCC) to seek penalties of up to $10 million or 10% of a supermarket's annual turnover for breaches, along with introducing low-cost alternative dispute resolution mechanisms. Supermarkets would be encouraged to pay compensation of up to $5 million to resolve disputes, with a focus on addressing the fear of retribution among suppliers.
The inquiry emphasizes setting minimum standards under the code that cannot be contracted out of in supply agreements and suggests increasing infringement notice amounts. However, it rejects the proposal for divestiture powers to address market power issues, citing potential risks of greater market concentration.
Consultations with stakeholders will refine the recommendations before the final report is submitted to the government later this year. The proposed mandatory code, coupled with robust enforcement of existing competition laws, aims to provide a credible deterrent against anti-competitive behavior in the grocery sector.
The report highlights the need to strengthen the code to better safeguard suppliers, particularly against retribution, which compromises the effectiveness of the current voluntary code introduced in 2015. Despite some improvements in supermarkets' behavior under the voluntary code, the inquiry found that opportunistic behaviors persist.
Key recommendations include empowering the Australian Competition and Consumer Commission (ACCC) to seek penalties of up to $10 million or 10% of a supermarket's annual turnover for breaches, along with introducing low-cost alternative dispute resolution mechanisms. Supermarkets would be encouraged to pay compensation of up to $5 million to resolve disputes, with a focus on addressing the fear of retribution among suppliers.
The inquiry emphasizes setting minimum standards under the code that cannot be contracted out of in supply agreements and suggests increasing infringement notice amounts. However, it rejects the proposal for divestiture powers to address market power issues, citing potential risks of greater market concentration.
Consultations with stakeholders will refine the recommendations before the final report is submitted to the government later this year. The proposed mandatory code, coupled with robust enforcement of existing competition laws, aims to provide a credible deterrent against anti-competitive behavior in the grocery sector.
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