Australia Tightens Supermarket Regulations

Australia is working to strengthen its regulations on supermarkets, reports The Wall Street Journal. Some changes include the strengthening of retailers’ codes of conduct and the introduction of new penalties.

The decision comes as many are concerned that big grocery chains have too much leverage over small suppliers, according to the report.

Under the new rules, the voluntary code of conduct that oversees the relationship between supermarkets and their suppliers would be compulsory. Those who breach the code of conduct would be subjected to penalties not exceeding 10 million Australian dollars ($6.6 million USD) for the most serious infringements.

The code would apply to Woolworths, Coles, Aldi, and Metcash; additionally, Costco would likely exceed the revenue threshold and be compelled to comply in the near future, said the report.

A report from former government minister Craig Emerson, who was appointed to review the industry code, found that in Australia, Woolworths, Coles, Aldi, and Metcash make up more than 80 percent of the market.

“In highly concentrated markets such as Australia’s food and grocery industry, relationships can be exploited by those with substantial market power,” said Emerson’s report. “Many food and grocery suppliers have no choice but to deal with Woolworths, Coles, Aldi and Metcash.”

Emerson’s report includes 11 final recommendations for supermarkets, with which the government said it agrees. The government added it will introduce a mandatory code; however, a date has not yet been set. Full Story (Subscription Required)