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].
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].
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].
The Australian Competition and Consumer Commission (ACCC) has enforcement powers and has indicated that supermarket compliance is a 2025-26 enforcement priority [6].
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].
**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:
1. **Delayed implementation and enforcement:** The code came into effect in April 2025, but this announcement has been in place since 2024.
The government's enforcement priorities indicate the ACCC expects significant non-compliance [6].
2. **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].
3. **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].
4. **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].
5. **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].
6. **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].
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.
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.