On 1 April 2025, Australia’s Food and Grocery Code of Conduct (“the Code”) transitioned from a voluntary framework to a mandatory regime.
These changes followed heavy criticism that the voluntary code was largely ineffective in regulating the behaviour of our largest supermarkets and wholesale grocery suppliers. The new mandatory regime has been heralded as providing fresh hope for suppliers of better times ahead.
At the heart of the new reforms is a promise: that suppliers can speak up without fear. The Code asks suppliers to trust that its newly-bolstered regime will create a fairer and more transparent supply chain thanks to the Code being backed by significant new penalties. But a critical question remains – can trust really be legislated? And will the new regime actually bring about behavioural change?
Overview of key changes
The new reforms adopt the 11 recommendations of Dr Craig Emerson in the independent review of the Code commissioned by the Federal Government last year: refer to our article Reforms to the Food and Grocery Code – how will supermarket suppliers be better protected? Broadly, the new reforms aim to:
- increase supplier protection against retailer retaliation;
- bolster supplier agency by improving dispute resolution mechanisms; and
- disincentivise non-compliant behaviour by imposing significant penalties for breaches of the Code.
Will the culture of fear linger?
In an industry built on the dominance of our large supermarkets, the possibility of retailer retaliation has been enough to silence most suppliers in the voluntary Code era, particularly small producers of fresh goods or niche products who were reluctant to challenge unfair terms or raise complaints for fear of retribution.
For many suppliers, the risk that their products might be delisted, moved to less visible placements or excluded from promotional campaigns has generally outweighed the potential benefits of speaking out. The updated Code seeks to confront this problem, but the real test will be whether the longstanding fears of suppliers can be replaced with trust in the new regime.
The limit of legal protection
The new anonymous complaints mechanism will allow suppliers to raise issues directly with the ACCC. However, even with the promise of anonymity, suppliers may still have concerns as to whether their identity will ultimately be protected.
To make an anonymous complaint to the ACCC’s new online portal, a supplier is encouraged by the ACCC not to disclose names or other forms of identification. However, at the same time, the ACCC acknowledges that the more information the supplier can give the ACCC, the more likely it is that they will be able to fully investigate the matter. More specifically, the portal calls for complainants to provide details of the alleged misconduct of the supermarkets, details of the damage it has caused and evidence to support the claims, such as copies of agreements, orders or emails.
Whilst the promise of anonymity is enticing, suppliers may reasonably fear that by arming the ACCC with the level of information the ACCC needs to properly investigate a claim, it may be possible to narrow down the supplier’s identity. Therefore, it will be interesting to see whether the new anonymous complaints system is taken up by suppliers and whether it results in any meaningful inroads to information gathering by the ACCC.
Big fines, but will there be big changes?
Unsurprisingly, the feature of the updated Code drawing the most attention is the new financial penalties. Large grocery businesses who breach the Code can now face fines of up to $10 million, 10% of their annual turnover or three times the benefit gained from the breach – whichever is greater.
These penalties are the harshest to ever attach to an industry code in Australia. Even financial powerhouses like Coles, Woolworths, Aldi and Metcash will no doubt be paying attention to penalties of this magnitude. And it’s not just the financial penalties supermarkets have to worry about, a win for the ACCC can draw close media scrutiny which is likely to be an added incentive for supermarkets to toe the line.
The ACCC is now responsible for monitoring compliance with the Code and bringing about enforcement action. In all likelihood, the success of the Code will be dependent upon the extent of its enforcement by the ACCC. Of course, this in turn requires suppliers to come forward to the ACCC and trust that their concerns will not only be heard, but that they will be acted upon without delay or consequence. And herein lies the challenge – it is difficult to see how real change will occur if suppliers continue to be hesitant to report misconduct.
Will there be lasting change?
The new obligations and enforceable penalties introduced by the updated Code aim to protect suppliers from unfair treatment and supermarkets abusing their power. While these changes aim to deter bad behaviour, they cannot build a supplier’s trust in the regime all on their own. For suppliers to have faith in the new Code and take advantage of its processes, we expect it will depend on how suppliers are being treated on a daily basis, how concerns are acknowledged and addressed and whether suppliers feel truly safe to speak up without fear of retaliation.
The updated Code is a necessary shift in the right direction. However, it will be interesting to see if the new and improved Code delivers lasting change.