Bunnings, Chemist Warehouse passed over in grocery code revamp while supermarket giants face multibillion-dollar fines

Federal Treasurer Jim Chalmers says increasing competition among supermarket giants is key to placing “downward pressure on prices”.

Jim Chalmers says increasing competition among supermarket giants is key to bringing down prices, following the release of a wide-ranging review into the Grocery Code of Conduct.

Some of the changes include multibillion-dollar fines on retailers that fail to comply with the mandatory code of conduct, which dictates how supermarkets like Woolworths, Coles, Aldi and IGA’s parent company Metcash deals with producers and farmers.

More competition will bring down prices, Treasurer Jim Chalmers says. Picture: NewsWire / Martin Ollman

While the federal Treasurer stopped short of saying how far prices could drop, he told Sunrise’s Natalie Barr that a more competitive system would create “better outcomes for consumers” and create “downward pressure on prices”.

“If it is more competitive, more transparent and people are getting a fair go, better outcomes will be seen at the supermarket checkout,” he said.

Dr Chalmers also recognised the system was skewed against farmers, growers and producers who have less negotiating power when dealing with major supermarkets.

The review recommended supercharged fines for major breaches that would be increased to whatever was greater between $10m or 10 per cent of turnover in the next 12 months.

The Treasurer said this would deliver a “fair go” for families, consumers and producers.

“We recognise that the supply chains need to be better for farmers, growers and producers,” he said.

“By doing that and making sure the supermarket sector is more competitive we can get better outcome for consumers.”

Amid public outcry over allegations of price gouging by supermarket retailers, the government will overhaul the Grocery Code of Conduct. Picture: NCA NewsWire / David Geraghty.

A spokesperson for Coles said the supermarket remained committed to the code of conduct.

“We are committed to its goals, knowing that strong, collaborative relationships with our suppliers are fundamental to our success and essential for serving our customers,” they said.

“Coles has worked collaboratively with Dr Emerson in his review to strengthen the Code.

“We will consider the final recommendations and government’s response in detail, and we remain committed to supporting a healthy and sustainable grocery sector.”

A Woolworths Group spokesperson said the company would consider the federal government’s response to the report “in detail”.

“Woolworths Group reiterates its support for the code becoming mandatory and we firmly believe healthy retailer and supplier relationships are key to the continued success of our sector, as well as serving the needs of millions of customers,” they said.

Both Woolworths and Coles have expressed their support for the Code following the release of the Emerson report which will make it mandatory. Picture: NewsWire / Roy VanDerVegt

“We welcome the decision to retain fast and cost effective avenues for dispute resolution, for the benefit of suppliers, especially smaller ones.”

They added Woolworths was also willing to support an “industry and government led price transparency initiative” in order to encourage greater price transparency in the supply of fresh fruit and vegetables.

Although the Albanese government has affirmed its support for the review, conducted by former Labor minister Craig Emerson, the final report rejected calls to expand the reforms to non-supermarkets like Bunnings, Chemist Warehouse, and Dan Murphy’s.

“The review considers that the code should not be extended beyond supermarkets to cover other retailers,” the inquiry’s final report said.

“This is not to say that these markets are functioning well for all players in those markets.”

Similarly, Dr Emerson declined to alter the code to offer greater protections for wine makers from major liquor retailers, with the report arguing that alcoholic beverages did not fall under the definition of groceries.

Former Labor minister Craig Emerson’s review into the Grocery Code of Conduct recommends its overhaul. Picture: Supplied.

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

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

Concerns raised by producers who indirectly supplied supermarkets, like livestock producers who sell their goods to abattoirs and meat processors, were similarly rejected.

“The review has not received compelling evidence to justify such an expansion,” it said.

Among the review’s additional recommendations is the establishment of an anonymous complaints mechanism, which would allow suppliers to raise any issues directly with the consumer watchdog, the ACCC.

Dispute resolution mechanisms between supermarkets and their suppliers should also be enhanced, the review said.