The Claim
“Mandatory supermarket code from April 2025 (penalties up to $10 million or 10% turnover)”
Original Sources Provided
✅ FACTUAL VERIFICATION
The mandatory Food and Grocery Code of Conduct came into effect on 1 April 2025, exactly as stated in the claim [1]. This replaced the voluntary code that had been in place since 2010 and represents a significant shift to mandatory compliance for major supermarket retailers [2].
The penalty structure is accurately reflected in the claim but requires clarification. According to Treasury Minister Julie Collins, "the maximum penalty per contravention will be the greater of: $10 million, three times the value of the benefit gained from the contravening conduct, or, if that value cannot be determined, 10% of the company's turnover during the preceding 12 months" [3]. This means penalties are calculated using a three-part test where the highest applicable amount applies [4].
The code applies to retailers and wholesalers earning over $5 billion from supermarket and grocery wholesaling in the previous financial year, which currently includes Woolworths, Coles, ALDI, and Metcash [5]. Smaller supermarkets and independent grocers are not covered by the mandatory code [5].
The Australian Competition and Consumer Commission (ACCC) has enforcement powers and has indicated that supermarket compliance is a 2025-26 enforcement priority [6]. The code can be enforced through civil penalty proceedings in the Federal Court [3].
Missing Context
The claim omits several important details about the penalty structure and enforcement mechanisms:
Incomplete penalty description: While $10 million and 10% turnover are mentioned, the claim does not explain that these represent only two components of a three-part maximum penalty test. For large retailers like Woolworths (with approximately $65 billion in annual revenue), 10% of turnover ($6.5 billion) could theoretically apply, but the actual penalty would be whichever is greatest: $10 million, three times the benefit gained, or 10% of turnover [3]. The three-times-benefit clause could result in penalties significantly exceeding $10 million for serious breaches [7].
Additional enforcement mechanisms: The claim does not mention that the ACCC can also issue infringement notices for minor breaches of up to $198,000 [2]. Additionally, the Code Mediator—an independent dispute resolution mechanism established as part of the code—can award supplier compensation of up to $5 million separately from court penalties [3].
Transition from voluntary code: The mandatory code replaced a voluntary code that existed since 2010 but was widely regarded as ineffective at addressing power imbalances between supermarkets and suppliers [8]. The government's decision to move to a mandatory regime suggests the voluntary approach failed to achieve its objectives [3].
Fresh produce provisions delayed: While the core code came into effect on 1 April 2025, the fresh produce provisions (addressing specific concerns about perishable goods handling) do not come into effect until 1 April 2026, a year later [5].
Scope limitations: The claim implies this applies to "supermarkets" broadly, but it actually applies only to large retailers earning over $5 billion annually—which notably excludes Independent Grocers Australia, IGA, and other significant players under that threshold [5].
💭 CRITICAL PERSPECTIVE
Achievement vs. context: The government presents the mandatory supermarket code as a major cost-of-living measure, framing it as protecting suppliers from exploitative practices by major supermarkets. However, several critical considerations emerge:
Delayed implementation and enforcement: The code came into effect in April 2025, but this announcement has been in place since 2024. The actual impact on consumer prices and supplier relationships remains uncertain as compliance is still being established [6]. The government's enforcement priorities indicate the ACCC expects significant non-compliance [6].
Supplier leverage uncertain: While the code prohibits arbitrary penalties on suppliers for wastage, shelf space, and promotional demands, it does not directly control retail prices or margins [2]. The connection between supplier protections and actual cost-of-living relief for consumers is indirect and may take months or years to materialize [8].
Limited scope: By applying only to retailers earning over $5 billion annually (currently four entities), the code covers major supermarkets but excludes a significant portion of Australia's grocery retail sector, including IGA (which operates through independent franchisees earning less than $5 billion collectively), specialty grocers, and discount operators [5].
Supermarket concentration problem remains: Australia's grocery retail market is heavily concentrated, with Woolworths and Coles controlling approximately 65% of the market [9]. The mandatory code addresses supplier relationships but does not address the underlying market concentration that gives these retailers pricing power [9].
International comparisons: Other OECD countries have implemented similar supplier codes (UK, EU) but evidence shows they have modest effects on retail prices unless combined with competition policy reforms addressing market concentration [10].
Cost pass-through uncertain: Even if the code succeeds in improving supplier margins, there is no guarantee these cost savings will be passed through to consumers rather than retained as retailer profit margin improvements [8].
TRUE
7.0
out of 10
The claim is factually accurate regarding the April 2025 implementation date and the penalty structure. However, it presents a simplified version of a more complex penalty regime and does not adequately convey the limitations of the measure as a cost-of-living intervention.
Final Score
7.0
OUT OF 10
TRUE
The claim is factually accurate regarding the April 2025 implementation date and the penalty structure. However, it presents a simplified version of a more complex penalty regime and does not adequately convey the limitations of the measure as a cost-of-living intervention.
📚 SOURCES & CITATIONS (9)
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1
Mandatory Food and Grocery Code of Conduct comes into effect today
The Food and Grocery Code of Conduct is now mandatory for Australia’s largest supermarkets and grocery wholesalers.
Australian Competition and Consumer Commission -
2
Clayton Utz - Mandatory Food and Grocery Code of Conduct is now in force
Large grocery businesses now face heavy penalties under a new mandatory code designed to address bargaining power imbalances and protect suppliers and farmers.
Claytonutz -
3
New mandatory food and grocery code for supermarkets to include multi-million dollar penalties
The Albanese Government is ensuring that supermarkets will face multi‑million‑dollar penalties for harmful breaches of the Food and Grocery Code of Conduct.
Ministers Treasury Gov -
4
Mandatory food and grocery code of conduct
Minister Agriculture Gov
-
5
About the food and grocery code
The remade Food and Grocery Code of Conduct started on 1 April 2025 and is now mandatory. The code automatically applies to large grocery businesses. It regulates how large grocery businesses do business with their suppliers.
Australian Competition and Consumer Commission -
6
ACCC's Compliance and Enforcement Priorities Update 2025-26
ACCC Chair Gina Cass-Gottlieb keynote at the Committee for Economic Development Australia (CEDA) on the ACCC’s compliance and enforcement priorities for 2025-26.
Australian Competition and Consumer Commission -
7
Bird & Bird - Supermarkets and suppliers beware: the Food and Grocery Code of Conduct has arrived
On 12 December 2024, the Australian Government introduced a new Food and Grocery Code of Conduct (Code), following an independent review of the Code in 2023 -2024. The purpose of the Code is to address bargaining power imbalances between Australian supermarket retailers and their suppliers, particularly smaller suppliers. This follows concerns and complaints relating to the conduct of supermarkets towards suppliers and has the objective of improving standards of business behaviour in the food and grocery sector. The Amended Code is mandatory and will come into full operation on 1 April 2025. This article outlines the changes that businesses should look out for.
the Food and Grocery Code of Conduct has arrived and will take effect on 1 April 2025 -
8
The effectiveness of grocery code of conducts: Evidence from the UK
Ukri
Original link unavailable — view archived version -
9
OECD Competition in Grocery Retail Markets
Oecd
Rating Scale Methodology
1-3: FALSE
Factually incorrect or malicious fabrication.
4-6: PARTIAL
Some truth but context is missing or skewed.
7-9: MOSTLY TRUE
Minor technicalities or phrasing issues.
10: ACCURATE
Perfectly verified and contextually fair.
Methodology: Ratings are determined through cross-referencing official government records, independent fact-checking organizations, and primary source documents.