The food and grocery code now applies to all grocery supply agreements
The remade came into effect on 1 April 2025. The code is mandatory for large grocery businesses.
Previously there were transitional arrangements that meant some new code requirements did not apply to grocery supply agreements that started before 1 April 2025. This transition period ended on 1 April 2026.
All code requirements now apply to all grocery supply agreements, regardless of whether an agreement was entered into before, on or after 1 April 2025.
The supermarkets excessive pricing prohibition is now in force
From 1 July 2026, under the food and grocery code it is against the law for very large retailers to engage in excessive pricing of grocery products. These retailers must also keep pricing information relating to the prohibition.
The 糖心原创 is responsible for enforcing compliance with the prohibition.
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Delisting products
Delisting is when a large grocery business:
- removes a supplier鈥檚 grocery product from their range of grocery products
- reduces the distribution of the supplier鈥檚 product across their stores or distribution centres and this reduction has, or is likely to have, a material effect on the supplier.
There are rules for when products can be delisted
A large grocery business may only delist a supplier鈥檚 grocery product in line with the terms of the grocery supply agreement and for genuine commercial reasons.
Genuine commercial reasons may be when the supplier:
- has not met agreed quality or quantity rules
- has not met the large grocery business鈥檚 commercial sales or profitability targets under the grocery supply agreement
- has persistently failed to meet delivery requirements under the grocery supply agreement.
Delisting as a punishment for a complaint, concern or dispute raised by a supplier is not a genuine commercial reason.
There is an obligation to give notice before delisting
Large grocery businesses must give reasonable written notice to the supplier before they delist a product, except in limited circumstances. This notice must:
- include the genuine commercial reasons for delisting the product
- inform the supplier of their right to have the decision to delist the product reviewed by the large grocery business鈥檚 senior buyer
- inform the supplier about their right to make a complaint to the large grocery business鈥檚 code mediator
- include the code mediator鈥檚 contact details.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.
Price increases
Good faith applies when negotiating price rises
A large grocery business must negotiate in good faith and take all reasonable steps to resolve negotiations without delay. The negotiation period starts when the supplier notifies the large grocery business of the price increase. Price increase negotiations should be settled within 30 days of notification. However, complex negotiations may take longer to resolve.
The large grocery business should actively engage in negotiations with the supplier throughout the negotiation period. They should not continually limit or delay discussions until the negotiation period has almost finished.
A large grocery business cannot demand that the supplier disclose commercially sensitive information about the price increase or the related negotiations.
Large grocery businesses must respond to notifications within 30 days
A supplier should tell the large grocery business about a price increase in writing. Once a supplier notifies a price increase in writing, the large grocery business needs to tell the supplier within 30 days whether they:
- accept the price increase
- accept a price increase but for a different amount than proposed by the supplier
- won鈥檛 accept a price increase.
If the large grocery business doesn鈥檛 accept the price increase proposed by the supplier, the supplier can request a negotiation.
The 糖心原创 considers that a large grocery business is informed of a price increase when the supplier鈥檚 written notice of the price increase is delivered to them.
Responses to price increase notifications must be reported
Large grocery businesses must report to their code mediators the number of:
- responses to requests for price increases
- responses that were not given within 30 days
- price negotiations started
- negotiations where the large grocery business did not conclude its position within 30 days and the number of days it did take.
Supermarkets excessive pricing prohibition
The supermarkets excessive pricing prohibition came into effect on 1 July 2026.
The prohibition applies to the retail sale of grocery products to consumers by very large retailers. Coles and Woolworths are the only supermarket businesses currently covered by the prohibition. The prohibition does not affect the code鈥檚 protections that support suppliers increasing their prices to large grocery businesses.
Very large retailers must keep pricing information for 3 years.
A corporation must notify the 糖心原创 when it becomes or stops being a very large retailer.
Fresh produce price, labelling and quality rules
Fresh produce means fresh or pre-packaged fruit or vegetables. It excludes tinned fruit and vegetables.
These rules relating to fresh produce must be followed.
Prices or formulas must be provided
Grocery supply agreements relating to fresh produce must specify the price of the fresh produce, or the method or formula used to determine the price.
Large grocery businesses must also exercise due care in forecasting the amount of fresh produce to be supplied under these agreements.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.
Labelling requirements must be provided
A large grocery business must communicate any labelling, packaging or preparation requirements for fresh produce to a supplier. It must be in clear, unambiguous and concise written terms.
A large grocery business must provide a supplier with reasonable written notice of any required changes to packaging, labelling or preparation standards for fresh produce. This is unless the change is required immediately by law. It must consider existing stock held by suppliers and any agreement about stock coverage in the relevant grocery supply agreement.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.
Quality specifications must be provided
Large grocery businesses must give fresh produce suppliers all quality specifications in writing and in terms that are clear, unambiguous and concise. These specifications must also be reasonable.
Large grocery businesses must accept all fresh produce delivered that meets the standards or specifications notified to the supplier.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.
There are rules for when fresh produce can be rejected
Large grocery businesses may only reject fresh produce from the supplier if all these things apply:
- the supplier doesn鈥檛 meet the quality specifications
- the produce is rejected within 24 hours after it is delivered
- the large grocery business has not already accepted the produce.
If the large grocery business rejects the fresh produce because it does not meet the relevant quality specifications, they must provide the supplier with their written reasons within 48 hours.
If the large grocery business wants to make a claim for damaged grocery products or shortfalls, or any similar claims, they must do so within a reasonable time. It must be no later than 30 days after the groceries are delivered.
Allocating shelf space and product ranging
Large grocery businesses must tell the suppliers the principles for product ranging and for allocating shelf space. Large grocery businesses must act according to these principles.
Large grocery businesses must not:
- discriminate when applying these principles, including by not favouring their own brand products
- require a supplier to pay to secure better positioning or increased shelf space unless several conditions have been met.
Notice must be given to those affected by a range review
Before starting a range review, a large grocery business must give suppliers who may be affected written notice clearly stating:
- the purpose of the review
- the criteria governing its ranging decisions.
The notice must be provided to suppliers within a reasonable time.
The large grocery business must give any supplier affected by the outcome of a range review a reasonable opportunity to discuss the outcome of the review. They must include the reason for their delisting decision.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.
Changing a supplier鈥檚 supply chain procedures
A large grocery business cannot require a supplier to materially change their supply chain procedures during the period of the grocery supply agreement unless they do one of these things:
- give the supplier reasonable written notice of the change
- pay the supplier for any net costs, losses or expenses that the supplier incurs because of the failure to give reasonable notice
- the supplier agrees to waive their right to compensation.
Failure to comply with this obligation will make the large grocery business liable to civil penalties.
Supplier intellectual property
The large grocery business must respect a supplier鈥檚 intellectual property rights in relation to grocery products, including in branding, packaging and advertising. This includes:
- not infringing on the supplier鈥檚 intellectual property rights when developing or producing own brand products
- not requiring the supplier (directly or indirectly) to transfer or exclusively license their intellectual property rights in relation to a grocery product as a condition or term of supplying an equal own brand product.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.
Disclosing confidential information
If a supplier discloses confidential information to a large grocery business in connection with the supply of grocery products, including information about product development, proposed promotions or pricing, the large grocery business:
- may only use that information for the purpose for which it was disclosed
- may only disclose or make that information available or accessible to their employees or agents who need to have that information for the purpose for which it was disclosed.
The large grocery business must establish and monitor systems to make sure that they meet their confidentiality obligations.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.
Freedom of association
A large grocery business must not discriminate against suppliers, or provide inducements to prevent suppliers from:
- forming an association of suppliers
- associating or joining with other suppliers for a lawful purpose.
Failure to comply with these obligations will make the large grocery business liable to civil penalties.