A GOVERNMENT review into supermarket supply chains has recommended a mandatory code of conduct for the country’s biggest operators, with a focus on fairness in dispute resolutions.

The Federal Government commissioned former Labor politician Craig Emerson to look into the Food and Grocery Code of Conduct – a voluntary code aimed at holding the business practices of supermarkets to account. Today he has delivered an interim report, with the full report due by the end of June.

Dr Emerson’s inquiry is one of many investigating the practices of the big two supermarkets, Woolworths and Coles, who have been facing growing public backlash for their role in the “cost of living crisis”. The senate and the ACCC are also looking into supermarkets.

In handing down today’s report, Dr Emerson said the code needed to be mandatory for Coles, Woolworths, ALDI and wholesaler, Metcash.

“The existing Food and Grocery Code of Conduct is not effective,” he said in the foreword of the report.

“It contains no penalties for breaches and supermarkets can opt out of important provisions by overriding them in their grocery supply agreements.

“Effective penalties must apply for breaches of the mandatory Code. This would bring the Australian Competition and Consumer Commissions (ACCC) into code enforcement. It would be able to seek penalties for major or systemic breaches of up to $10 million, 10 per cent of a supermarket’s annual turnover, or three times the benefit it gained from the breach, whichever is the greatest.”

In enforcing the Code the ACCC will need to proceed through the courts. A “low cost” alternative has also been put forward to help work through disputes.

“This would involve replicating processes for independent mediation and arbitration that are in other industry codes, while also allowing for the complaint-handling provisions of the voluntary Code,” Dr Emerson said.

NFF welcomes interim report

One of the loudest voices calling for a mandatory code of conduct has been the National Farmers’ Federation.

President David Jochinke said changes to the code are desperately needed, which was reflected in the report.

“The status quo clearly hasn’t worked for many producers. Farmers have continued to suffer a massive power imbalance, so we support measures to improve transparency and accountability,” he said.

“Farmers need this stronger protection in negotiations where there is a large number of small producers dealing with a small number of large retailers.

Mr Jochinke said increasing penalties of non-compliance to $10m and putting in safeguards against retribution were good moves.

“This should send a strong message to retailers that the code now has teeth,” Mr Jochinke said.

“Likewise, we support the proposal to better protect farmers from commercial retribution.

“It makes sense to monitor commercial decisions by retailer buying teams following a disagreement, and that will help give producers confidence to speak up.”

Report taking too long, Littleproud

Nationals leader David Littleproud said waiting until June 30 to deliver the final draft of the report was too long.

“The Nationals wrote to Labor more than 15 months ago offering bipartisan support, urging Labor to take action on supermarket price gouging, which impacts almost every single Australian,” Mr Littleproud said.

“Instead, Labor allowed families and farmers to be ripped off, because it was too focused on a $450 million failed Referendum.”

Upcoming inquiries

• Submissions to Dr Emerson’s inquiry are open until April 16.
• The Senate inquiry into supermarket prices is holding public hearings next week and is expecting a report to be handed down on May 7.
• The ACCC is expected to have an interim report available by August 31 this year and a full report by February 28 next year.