Woolies wants food and grocery code extended to Bunnings, Amazon and Costco

Online retail giants Amazon, bulk goods store Costco, and hardware chains like Bunnings should be subject to a mandatory code of conduct, Woolworths says, after a major competition review called for tougher and legally enforceable rules in the supermarket sector.

Dr Craig Emerson’s interim review of the Food and Grocery Code of Conduct, released Monday, says the voluntary rulebook designed to protect small suppliers dealing with powerful companies ought to be made mandatory.

In his view, supermarket giants commanding over $5 billion a year in revenue — like Woolworths, its key competitor Coles, and ALDI — should face significant financial penalties for breaching the rules, and should be barred from taking “retribution” against small suppliers that raise complaints.

Woolworths responded to the interim review on Monday, saying it supports the code “becoming mandatory for all large retailers and wholesalers of groceries to engender public trust and to level the playing field for retailers and wholesalers alike”.

But it also called for an expansion beyond traditional food and grocery businesses.

“The Code should apply to all major retailers operating in Australia, including global retail giants such as Amazon and Costco, who have global revenues many times the size of Australian supermarkets,” the company said.

Additionally, it should apply to large Australian retailers like Bunnings and pharmacy giant Chemist Warehouse, “who also compete in grocery categories including everyday needs such as household products (eg cleaning), and personal care”.

Neither the interim report nor Emerson himself, have discounted the possibility of the code being extended beyond ‘traditional’ grocery retailers.

“Woolworths, I think, makes a good point, and that is the code to be extended should be expanded to cover rivals Amazon, Costco and even Chemist Warehouse,” Emerson told Nine.

The case for expansion “has not yet been made in full”, the report says, noting “there could be unintended consequences from extending the Code to other retailers beyond those involved in the supermarket business”.

Even if the Food and Grocery Code of Conduct is not expanded beyond its current target firms, similar regulatory frameworks are already under consideration by the ACCC.

The competition watchdog’s ongoing Digital Platforms Inquiry has recommended “digital platforms comply with minimum internal dispute resolution requirements and that, should a dispute not be resolved internally, an ombudsman scheme be established to resolve complaints and disputes with digital platform providers”.

And in September 2022, it said there should be “minimum standards for digital platform dispute resolution processes and the ability for users to escalate complaints to an independent ombuds… These consumer protections should be given effect in legislation and apply to all digital platforms that supply search, social media, online private messaging, app stores, online retail marketplaces and digital advertising”.

On paper, such a scheme could closely mirror the Food and Grocery Code of Conduct.

The question will be considered in the final Emerson report due before June 30 this year.