Australia’s leading supermarkets could be subject to fines of up to A$10m ($6.5m) under a proposed mandatory Food and Grocery code of conduct. 

The recommendation comes from a government-commissioned interim report by former competition minister Craig Emerson. 

The report makes eight firm recommendations and a further three that require stakeholder views. 

Dr Craig Emerson said:  ‘An effective Code of Conduct would benefit consumers through greater choice and better prices by enabling suppliers to innovate and invest in modern equipment to provide higher‑quality products at lower cost.” 

The Australian Competition and Consumer Commission (ACCC) would enforce the mandatory code. 

The report suggests that supermarkets with annual revenues exceeding A$5bn should adhere to the previously voluntary code. 

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Coles, Woolworths, Aldi and wholesaler Metcash currently meet its criteria. 

Woolworths and Coles, which together account for two-thirds of Australia’s grocery sales, reported sales of A$64bn and A$41bn respectively in 2023.  

The report suggests fines could be as high as A$10m or 10% of revenue for non-compliance.  

Emerson’s report also advises against granting the Australian Competition and Consumer Commission (ACCC) the power to force supermarket operators to sell assets, as this could result in higher market concentration. 

In March 2023 the Australian Green Party introduced a bill in the Australian Senate that would grant divestiture powers to target supermarket duopoly.  

“If forced divestiture resulted in a supermarket selling some of its stores to another large incumbent supermarket chain, the result could easily be greater market concentration,” Emerson’s report states. 

A Woolworths spokesperson supported the mandatory code but insisted it should also include other large competitors with significant global revenues, such as Amazon and Costco.  

A Coles spokesperson re-affirmed the company’s commitment to providing value to customers while maintaining strong relationships with suppliers. 

The interim report of the independent review will be out for consultation until 26 April 2024. 

The final report will be released on 30 June.