Mandatory Food and Grocery Code of Conduct: How It Works From 2025

From voluntary to mandatory: the 2025 reform

The Competition and Consumer (Industry Codes—Food and Grocery) Regulations 2024 commenced on 1 April 2025, marking a significant shift in the operation of the Food and Grocery Code. This change made the Code mandatory, replacing the voluntary 2015 Food and Grocery Code that previously required retailers to opt in.

The mandatory Code applies automatically to retailers and wholesalers that earned more than $5 billion from supermarket or grocery wholesaling in the previous financial year. Currently, this includes Coles, Woolworths, ALDI and Metcash.

Transitional arrangements for supply agreements entered into before 1 April 2025 ended on 1 April 2026. From this date, all grocery supply agreements are subject to the full requirements of the mandatory Code.

Core obligations on large grocery businesses

Large grocery businesses will be subject to core obligations under the Mandatory Food and Grocery Code of Conduct. These businesses must deal with suppliers in good faith throughout the entire lifecycle of grocery supply agreements. This principle of good faith applies to all interactions and dealings.

Grocery supply agreements must be documented in writing and clearly outline specific terms. These terms will include details relating to price, payment, delivery, quality, and a process for dispute resolution. Retailers are prohibited from unilaterally changing supply agreements retrospectively or making unreasonable changes without the supplier’s agreement.

To ensure supplier concerns are addressed, each captured business is required to appoint an independent Code Arbiter. This Arbiter will provide a confidential avenue for suppliers to raise and resolve disputes. Specific protections also exist regarding payment for shrinkage, wastage, and the de-listing of supplier products.

Penalties and ACCC enforcement powers

The Mandatory Food and Grocery Code of Conduct includes penalties for non-compliance. For the most serious breaches, the maximum penalty is the greater of $10 million, three times the benefit derived from the contravention, or 10% of annual turnover. Lower-level breaches of less serious obligations attract civil penalties, which are measured in penalty units. Unfair contract terms 2026 penalties may also apply.

The Australian Competition and Consumer Commission (ACCC) has enforcement powers to ensure adherence to the Code. These powers include the ability to issue infringement notices for alleged breaches. The ACCC monitors compliance through annual reporting from retailers covered by the Code and also receives confidential complaints from suppliers.

Suppliers who believe a retailer has breached the Code can raise their concerns through several avenues. They can engage with the retailer’s Code Arbiter, an independent reviewer, or directly lodge a complaint with the ACCC.

What suppliers should do now

Suppliers should begin preparing for the mandatory Food and Grocery Code of Conduct. A key initial step is to review existing supply agreements. These agreements need to be assessed against the Code’s written terms requirements. It is important to identify which captured retailer each agreement relates to, and to obtain contact details for that retailer’s Code Arbiter.

Suppliers should maintain thorough records. Documentation of any retrospective variations to agreements, de-listings of products, or fee changes occurring since 1 April 2025 is essential. These records may be relevant if disputes arise. Suppliers should also be familiar with ACL misleading and deceptive conduct provisions.

To proactively manage potential issues, suppliers are encouraged to utilise the confidential supplier complaint pathways established under the Code. Furthermore, training commercial teams on the expectations surrounding good faith dealing during negotiations will contribute to a more constructive and compliant business environment.