Australia will impose heavy fines on supermarket chains that abuse their bargaining power over suppliers.
Under rules announced by the government on Monday, supermarket chains earning more than A$5 billion ($3.3 billion) in annual revenue will be required to comply with a previously voluntary industry code of conduct.
The changes will affect Woolworths, Coles, Aldi and Metcash, which together make up more than 80% of the market, and could expand to retailers such as Costco as their revenues grow.
Violations of the code will be subject to fines of up to 10% of annual turnover, leaving retailers liable to pay billions of dollars in fines.
The government said it would also establish an anonymous supplier and whistleblower complaints mechanism within the Australian Competition and Consumer Commission.
“It’s about ensuring fair intervention for families and farmers. Our efforts will help ensure our supermarkets are as competitive as possible so Australians get the best possible prices,” Treasurer Jim Chalmers said in a joint statement with Assistant Competition Minister Andrew Leigh on Monday and the Minister of Agriculture, Murray Watt. .
“We are cracking down on anti-competitive behavior in the supermarket sector so that people get fairer prices at the checkout,” the statement reads.
The changes come after a report by Craig Emerson, a former competition minister, found that the previous code failed to address the “imbalance of bargaining power” between supermarkets and their suppliers.
In its report, Emerson said that suppliers reported fearing retaliation from supermarkets if they complained and that an effective code requires a “credible threat of effective enforcement and must not be undermined by the threat of signatories walking away from their commitments.”
Australia has one of the most concentrated food markets in the world.
Woolworths and Coles, the largest and second largest operators, together account for around two-thirds of all sales.
Research released last week by consumer group Choice found there was less than a dollar of price difference between the two chains when comparing a typical grocery basket.
