Australia has one of the most highly concentrated supermarket sectors in the world.
Hefty fines for supermarket misbehaviour could soon be on the cards, according to the initial findings of a review into the Food and Grocery Code.
Former Competition Minister Craig Emerson conceded a “heavy imbalance” in market power existed within the supermarket sector in his interim report handed down today, recommending the Food and Grocery Code be made mandatory with potentially huge fines for its breach.
NSW Farmers Vice President Rebecca Reardon said the report’s recommendations around the code could finally set the wheels in motion to address market power misuse by supermarket giants.
“For years, grocery giants have had near unfettered ability to use their market power against suppliers, with a lack of accountability or penalties for any unconscionable behaviour impacting the supply chain,” Mrs Reardon said.
“Having a mandatory Code of Conduct for our supermarkets and their suppliers with enforceable, meaningful penalties for its breach could make the world of difference when it comes to cracking down on the harmful practices of these super powers.
“Anti-competitive activity needs to be stopped in its tracks, and it’s nice to hear the Federal Government step up and admit the current Code is not good enough.”
However, Emerson’s failure to back divestiture powers as one of the tools in the toolbox to address harmful behaviour by supermarkets was disappointing, Mrs Reardon said.
“Australia has one of the most highly concentrated supermarket sectors in the world, and this lack of competition has enabled these superpowers to behave as they have,” Mrs Reardon said.
“We need a number of tools and reforms to address the issues at hand, and we have pointed to divestiture powers as one of these mechanisms that could in fact be very effective in busting supermarkets for unfair behaviour.
“Supermarkets have too much power, and too often, they are using it in a way that is hurting farmers and harming families.
“This market concentration is the core issue and the elephant in the room, which we need to address if we want to truly change the system.”
-NSW Farmers