Should Bunnings, Ikea and Chemist Warehouse Be Included In The Supermarket Code of Conduct?

As the government tightens the restrictions around some of the country’s biggest supermarkets including Coles and Woolworths with a new Food and Grocery Code of Conduct proposed earlier this year, there are questions swirling as to whether other big retailers such as Bunnings, IKEA and Chemist Warehouse should also be subject to the rules of the Code.

A parliamentary inquiry is probing the reach of big-box retail chains selling everyday household items.

Currently voluntary for supermarkets and suppliers, the federal government is moving to make the code mandatory. The code has been proposed to be made mandatory for all grocery retailers and wholesalers with an annual turnover greater than A$5 billion. At present, this would include Woolworths, Coles, Aldi and Metcash.

The fines for falling foul of the rules are steep. The code introduces penalties for the more harmful breaches with the maximum penalty the greatest of A$10 million, three times the benefit gained from the contravening conduct or 10 per cent of turnover in the preceding 12 months.

While Woolies has called for Amazon, Costco, Bunnings and Chemist Warehouse to be subject to the code, Food and Grocery Council [AFGC] chief executive Tanya Barden has told MPs the effectiveness of the existing rules would be weakened if they were extended beyond supermarkets, reported the Australian Financial Review.

“As one of the code’s key architects, the AFGC can testify to its effectiveness in improving commercial relationships between supermarket retailers and their suppliers since its inception in 2015,” said Barden.

“However, it does not follow that ‘big-box’ retailers should be included under the existing code. The code’s provisions are specifically tailored to address issues between supermarket retailers and their suppliers. This is unlikely to be well-suited to extension outside of the supermarket channel.”

She said a new industry code specifically for large format retailers would be better suited to cover their trade and interactions with suppliers. The AFGC represents major manufacturers and suppliers, including Arnott’s, Mars, Coca-Cola, Kraft Heinz and Nestle Australia.

Prime Minister Anthony Albanese has left open the option of expanding the code of conduct to include big box retailers.

Bunnings CEO Mike Schneider has previously indicated that the company should not come under the supermarket and grocery code of conduct, but would adhere to it if required. “If there’s a code, there’s a code, but we’re not going to change our behaviour because we genuinely want to do the right thing,” said Schneider.

Meanwhile, supermarkets Coles and Woolies are coming under renewed pressure after the Australian Competition & Consumer Commission (ACCC) took both of them to Federal court last week over allegations that they are misleading customers with their discount pricing claims.

The ACCC contends that the supermarkets offered certain products at a regular price for at least 180 days. They then increased the price of the products by at least 15 per cent for a relatively short period of time, and subsequently placed it onto their ‘Prices Dropped’ or ‘Down Down’ programme.

Separately, the ACCC was directed by the Treasurer in January 2024 to conduct an inquiry into the Australian supermarket sector, its pricing practices and the relationship between wholesale, farmgate and retail prices. That investigation is ongoing and the final report is due by 28 February 2025.