Shoppers to have their say as supermarket pricing inquiry scrutinises code of conduct

Shoppers and farmers are being encouraged to have their say about supermarket prices and how competition can be increased to lower grocery bills.

A review will consider if suppliers and consumers are getting a fair deal from the supermarkets. Source: AAP / Luis Ascui

Key Points

• An independent review of the food and grocery conduct code began on Monday.
• The review will look into whether consumers and suppliers both are getting a "fair deal".
• There is a voluntary code of conduct in place for supermarkets but critics say it's too weak.

Australian shoppers will have a chance to have their say on supermarket prices and the impact they have on their household budgets as part of a new inquiry.

Consultations for an independent review of the food and grocery conduct code begin on Monday, with submissions set to close on 29 February.

The grocery sector is more concentrated in Australia than in other countries, Assistant Minister for Competition Andrew Leigh says.

Coles and Woolworths dominate Australia's supermarket sector. Source: AAP / Dan Himbrechts, Darren England

"This review ... will look at whether the code is ensuring that both suppliers and consumers are getting a fair deal," Leigh said.

"A competitive sector benefits the suppliers who get a fair price for their work and ultimately consumers who see the effects through lower prices."

It was vital everyone in the sector was treated fairly and that Australian families pay a fair price at the checkout, Agriculture Minister Murray Watt said.

Putting the code under the spotlight would help balance the power between supermarkets and suppliers, including farms, he said.

"Many farmers have talked to me about how hard they find it to deal with the supermarket chains and the lack of transparency that exists in those negotiations," he said.

Farmers say the gap between wholesale prices and what consumers pay at the checkout is increasing. Source: AAP / Lukas Coch

Review to look into making code of conduct mandatory

The voluntary code of conduct has four signatories — Woolworths, Coles, Aldi and Metcash — and their suppliers are automatically covered.

Repealing the code would not be considered, the man in charge of the review Craig Emerson said, as he mulls whether or not to make it mandatory.

Critics of the voluntary code say it's too weak while proponents argue mandating it could open up long legal proceedings that result in suppliers going broke before they conclude, Emerson said.

However, enforcement through lengthy legal proceedings is not the only option under a mandatory code.

"A mandatory code with penalty provisions would likely incentivise greater compliance by supermarkets," he said.

"Enforcement options could include infringement notices and court proceedings to impose financial penalties for non-compliance."

Greater competition between supermarkets would lead to higher prices for suppliers and lower prices for consumers, Emerson said.