What's happening

Last updated May 2026

The Mandatory Grocery Code is live. Here's what it actually does.

The Mandatory Food and Grocery Code of Conduct took effect on 1 April 2025. It protects suppliers, not consumers. Here's what it covers, who it applies to, and what it means for grocery prices.

If you are hoping the Grocery Code will bring down the price of milk, it will not. The Mandatory Food and Grocery Code of Conduct protects farmers and manufacturers. Not you. Not yet. It is the biggest structural change to Australian grocery regulation in a decade, and understanding what it actually does (and does not do) matters, because the two get confused constantly.

What actually happened to suppliers.

To understand why this Code exists, you need to understand what suppliers were dealing with before it. The ACCC's Supermarkets Inquiry documented specific practices that had become routine in the relationship between major retailers and their suppliers:

• Retrospective price changes. Retailers would agree to a price with a supplier, then change the terms after the deal was struck, shifting costs back onto the supplier. A farmer who agreed to supply potatoes at $2.00/kg might find the agreed price reduced to $1.80/kg after delivery.
• Forced promotion funding. Suppliers were required to co-fund promotions (catalogues, end-of-aisle displays, "specials") that they had not agreed to and did not benefit from. The ACCC's inquiry documented cases where suppliers were given less than 48 hours to agree to co-fund promotions worth hundreds of thousands of dollars, with the implicit threat of reduced shelf space or delisting.
• Extended payment terms. Payment timelines were routinely stretched beyond what had been agreed, putting cash flow pressure on smaller suppliers who had already delivered the goods.
• Fear of retaliation. Suppliers who raised concerns about any of these practices feared losing shelf space, being delisted, or having their products moved to less visible locations. The power imbalance was so severe that many suppliers chose to absorb the loss rather than complain.
• No enforcement mechanism. The ACCC received complaints, but under the voluntary code it had no effective power to investigate or penalise. Retailers faced no financial consequences for breaches.

These are not hypothetical scenarios. They are findings from the ACCC's formal inquiry, based on confidential submissions from suppliers across the industry. The Code exists because this system was documented, in detail, and found to be broken.

What the Code does.

The Mandatory Food and Grocery Code of Conduct sets binding rules for the commercial relationship between large retailers and their suppliers. It directly addresses the practices the ACCC documented:

• Bans retrospective changes to supply agreements. Once a deal is struck, the retailer cannot alter the terms to shift costs or risks back onto the supplier.
• Bans requiring suppliers to fund promotions without consent. Suppliers cannot be forced to pay for in-store promotions, catalogue placements, or discounting they did not agree to.
• Requires written agreements for all supply relationships. Every commercial arrangement between a covered retailer and a supplier must be documented in writing, with clear terms.
• Establishes a binding dispute resolution process. Suppliers now have a formal, confidential pathway to resolve disputes without relying on the goodwill of the retailer. This is critical, because fear of retaliation was the main reason the voluntary code failed.
• Creates a dedicated Grocery Trade Practices Commissioner within the ACCC to oversee compliance and enforcement.

Who it covers.

The Code applies to grocery retailers with annual revenue exceeding $5 billion. Four companies currently meet that threshold:

• Woolworths
• Coles
• ALDI
• Metcash (the parent company of IGA)

Harris Farm, Costco, and smaller independent grocers are not covered by the Code. Suppliers of all sizes are protected, from large food manufacturers to small family farms.

What it doesn't do.

This is the part that catches most people off guard, and it is worth being specific about.

If Woolworths raises the price of home-brand butter from $4.00 to $4.50, the Grocery Code has nothing to say about it. That is a consumer price decision. The Code regulates the relationship between retailers and suppliers. What you pay at the checkout is a separate question entirely.

• Does NOT regulate consumer prices. The Code is about the supply chain, not the shelf. Consumer pricing is addressed by the separate excessive pricing ban, which takes effect on 1 July 2026, and even that only applies to retailers with revenue over $30 billion.
• Does NOT prevent price increases driven by input costs. If the cost of wheat, fuel, or labour goes up, retailers can still pass those costs on to consumers. The Code has no mechanism to cap, review, or challenge retail shelf prices.
• Does NOT apply to non-grocery products sold in supermarkets. Homeware, clothing, electronics, and other general merchandise categories are outside the Code's scope.
• Does NOT guarantee lower prices for shoppers. Fairer supplier treatment may eventually create a more competitive supply base. But there is no direct mechanism connecting the Code to the price on your receipt.

Grocery Code vs Excessive Pricing Ban.

These are two separate pieces of regulation, often confused. They address different problems, protect different groups, and cover different retailers. Here is how they compare side by side.

The key difference: the Grocery Code regulates the supply chain (how retailers treat the companies that sell to them). The Excessive Pricing Ban regulates the shelf (what retailers charge you). If you care about what you are paying at the checkout, the Excessive Pricing Ban is the one to watch. For details, see Australia's price gouging ban: what changes on July 1.

Why you should care even though it doesn't cover you.

The argument for paying attention to the Grocery Code, even as a consumer, is indirect but real.

When retailers squeeze suppliers on margins, two things can happen. Suppliers absorb the loss, which over time drives some out of business. Fewer suppliers means less competition in the supply chain, which eventually means higher wholesale prices and less product variety. Alternatively, suppliers pass the cost through in higher wholesale prices, which retailers then pass through to you at the checkout.

Either way, the cost reaches you. It just takes longer and travels a less visible route.

A fairer supply chain could, over time, support a more competitive base of suppliers. More suppliers competing for shelf space puts downward pressure on wholesale prices. That is the theory. Whether it plays out depends on whether the Code is enforced, whether suppliers feel safe enough to actually use the dispute resolution process, and whether retailers change their commercial behaviour or simply find new ways to apply pressure.

This will take years to become visible. It is not a quick fix.

Why it replaced the voluntary code.

The previous Food and Grocery Code of Conduct was introduced in 2015 as a voluntary arrangement. Retailers could choose whether to sign up, and the consequences for breaching it were minimal.

According to the ACCC, the voluntary code was "largely ineffective." Retailers who signed up faced no financial penalties for breaches. Suppliers feared retaliation for raising complaints, because there was no confidential or independent complaints process. The power imbalance between large retailers and their suppliers remained unaddressed.

The ACCC Supermarkets Inquiry, which delivered its final report in February 2025, recommended that the code be made mandatory with financial penalties of up to $10 million per breach. The government accepted that recommendation and the Mandatory Code commenced on 1 April 2025.

Timeline.

One year in. What has actually happened.

The Code passed its first anniversary in April 2026. The ACCC appointed the first Grocery Trade Practices Commissioner, who has oversight of compliance and enforcement. The first formal compliance reports from covered retailers are expected in the second half of 2026. The ACCC has indicated it will publish de-identified case studies of enforcement actions, which will be the first concrete evidence of whether the Code is changing behaviour.

The real test is not whether the rules exist. It is whether suppliers feel safe enough to use them. Under the voluntary code, the complaints process was so exposed that suppliers avoided it entirely. The mandatory Code introduced confidential dispute resolution for exactly this reason. Whether that confidentiality holds, and whether the Commissioner acts on complaints with visible consequences, will determine whether the Code is more than symbolic.

It is too early to judge. But the mechanisms are in place, and the first results will be public within months.