Competition & Consumer Law : 2025 Reforms

5 July 2025 in Commercial Lawyers | 10 min read | skip to FAQs

This article explores the reforms made to Australian competition and consumer law in 2025, highlighting three major changes: the introduction of the mandatory Food and Grocery Code of Conduct for applicable businesses, the revision of the Environmental Claims Code, and increased funding to monitor the supermarket and retail sectors. We also examine the enforcement of these reforms in a practical setting.

Food and Grocery Code of Conduct

The updated Food and Grocery Code of Conduct (Grocery Code) came into effect on 1 April 2025 pursuant to the Competition and Consumer (Industry Codes – Food and Grocery) Regulations 2024. This updated Grocery Code replaces the previous voluntary version overseen by the Australian Competition and Consumer Commission (ACCC).

The Grocery Code was initially created in 2015 and participation was voluntary. It aimed to address unethical practices in the grocery industry that created an imbalance of power between the wholesalers and their suppliers. However, the Australian Government received feedback from stakeholders suggesting that the framework was insufficient in practice. A comprehensive review of the voluntary code was conducted in 2023-2024 to respond to these concerns, culminating in a report written by Dr. Craig Emerson. These recommendations were made to better protect suppliers, and to ensure transparency within consumer relationships. One of the eleven recommendations made was for the Grocery Code to become mandatory for particular businesses.

Definitions

A “retailer is defined as a company operating a supermarket business in Australia, while a “wholesaler” is one that purchases groceries from suppliers for resale. A “supplier” includes businesses that supply grocery products to a retailer or wholesaler for consumer sale.

Who does the Grocery Code apply to?

The Grocery Code applies to corporations in the supermarket industry with an annual revenue of at least $5 billion dollars (large-scale businesses). This includes wholesalers and retailers.

New Provisions in Competition and Consumer Law

While many provisions from the voluntary code have been retained, the mandatory version that is now in effect for large-scale businesses introduces several important provisions. These include:

1. Prohibition of retaliatory behaviour by retailers or wholesalers.
2. Obligations for senior executives to directly oversee supplier dealings.
3. Mandatory appointment of a Code Mediator to manage disputes.
4. Introduction of a Code Supervisor, empowered to independently assess the performance of Code Mediators when required.
5. Expansion of alternative dispute resolution mechanisms.
6. Requirement to notify the ACCC after becoming a large-scale business.
7. Mandatory confidentiality for mediators, supervisors, and all other parties.

New Legal Obligations under the Grocery Code

Under the Grocery Code, large-scale businesses such as retailers and wholesalers are required to act in good faith and engage in fair trading practices. All business dealings with suppliers must be formalised in writing, ensuring transparency and accountability. These written agreements cannot be amended without the supplier’s consent, and no contract may override or be inconsistent with the provisions of the Grocery Code.

Retailers and wholesalers must also provide suppliers with clear documentation outlining their product range and shelf allocation policies. This helps ensure that suppliers understand how their products are being positioned and sold. In the case of purchasing products from suppliers, the Grocery Code requires that the quality standards be communicated in writing. These standards must be clear and use specific terms. If a retailer or wholesaler decides to reject a delivery of goods, they must give written notice within 24 hours of the delivery and clearly provide the reason for the rejection.

In addition to this, large-scale businesses are required to keep the original copy of each grocery supply agreement for six years after the agreement has ended. This helps maintain a reliable record of supplier relationships and contractual terms.

Finally, supermarkets and retailers are expected to respect the intellectual property rights of their suppliers and each other. This includes refraining from copying or imitating the packaging or branding (intellectual property) of competing products, thereby supporting innovation and fair competition in the marketplace.

Compliance Monitoring

The ACCC remains responsible for monitoring compliance with the Grocery Code. It is responsible for conducting regular compliance checks to ensure that large-scale businesses abide by the Grocery Code and Australian Consumer Law, Schedule 2 of the Competition and Consumer Act 2010 (Cth). In an attempt to remain informed of potential contraventions of the Grocery Code, the ACCC has launched a confidential whistleblower channel for suppliers to report any alleged misconduct by large-scale businesses. Claims that are successful in establishing a failure to comply with the Grocery Code may result in large civil penalties, as set out below.

Financial Penalties

The Australian Government passed the Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Bill 2024 which increased the penalties for breaches of the Grocery Code. Under the reform, the maximum penalty a court can impose for systemic contraventions of the Grocery Code is:

1. $10,000,000;
2. If the court can determine the combined value of the ‘reasonably attributable’ benefit obtained, then three times this amount; or
3. If the court cannot determine the combined value of the benefit, 10% of the business’s revenue made throughout the previous financial year.

In addition to the above, the ACCC can issue an infringement notice for 600 penalty units (currently equivalent to $198,000) to corporations. This only applies if the ACCC has reasonable grounds to believe that a civil penalty provision of the Grocery Code has been breached.

The use of Alternate Dispute Resolution

Pursuing legal action through the courts can be time consuming and expensive. To avoid this, many commercial disputes, particularly between different businesses, are resolved through alternative dispute resolution. The Grocery Code recommends that the Code Mediators replace Code Arbiters as an option for resolving disputes, however only if the supplier has agreed to it.

A mediator is a neutral third party who assists the disputing parties to come to an agreement settlement on their own. Rather than imposing a verdict, a professional mediator will work with the two parties to discuss the interests and positions of both. The decision reached by way of mediation are non-binding until formalised in a written agreement.

Is the Grocery Code an effective tool in Competition and Consumer Law?

The reforms to the Grocery Code are designed to improve fairness and transparency throughout the supply chain by regulating the conduct of large-scale businesses. It also addresses particular imbalances in bargaining power, protects suppliers from retribution, and strengthens dispute resolution mechanisms. The Australian Government will review it over time to ensure it works effectively in practice.

Environmental Claims Code

Australia’s marketing and advertising industry body, the Australian Association of National Advisors (AANA) has increased its efforts to address greenwashing in marketing. A new and improved Environmental Claims Code (Environmental Code) replaced the current version and came into effect 1 March 2025 to address the growing issue of greenwashing in advertising. This revised code promotes stricter standards for environmental claims, with the aim of enhancing transparency and consumer confidence in advertising claims.

Background to the Environmental Code

The Environmental Code was introduced in response to increasing concerns about the credibility of false claims made in advertising and product labelling. A recent inquiry by the ACCC reviewed 248 businesses and revealed that 57% of these businesses were making environmental or sustainability claims that were potentially misleading or amounted to greenwashing.

Greenwashing involves the use of false or exaggerated claims to present a product, service, or company as environmentally friendly. This practice is not only unethical but also undermines consumer trust and damages the reputation of the responsible businesses.

To address this issue, the Environmental Code identifies clear standards for environmental claims. It applies to all forms of advertising, including marketing communications and other promotional materials, with the aim of ensuring that environmental claims are accurate, transparent, and verifiable.

The Five Key Rules

Environmental claims in advertising must abide by the following rules:

Rule 1	Truthful and Factual	Not be false or inaccurate; and Not, or be likely to, mislead or deceive the target consumers.
Rule 2	Evidence	Must be supported by substantial supporting evidence.
Rule 3	Clear and Not Vague	Use clean language; Be specific; and Include all important limitations, conditions or qualifications in a clear manner .
Rule 4	Genuine Benefit	Describe a genuine benefit to the environment; and Not exaggerate the environmental benefit.
Rule 5	Future Claims	Future environmental claims to be based on these rules.

These guidelines apply across all advertising mediums, provided that the advertiser has reasonable control over the content that is published.

The Dangers of Greenwashing

Environmental claims that are false or misleading are detrimental to consumers as such claims:

1. interfere with the ability of consumers’ to make informed purchases;
2. cause unfair competition with businesses that offer products or services that are legitimately environmentally sustainable; and
3. undermine the credibility of genuinely sustainable businesses and public trust in environmentally sustainable initiatives.

Who does the Environmental Code apply to?

The Environmental Code, applies to all businesses making environmental or sustainability claims in Australia, regardless of size or market sector. These include manufacturers, retailers, and service providers. Claims made on packaging, websites, and social media must all comply with the Environmental Code.

Regulation of the Environmental Code

With respect to business compliance with the guidelines created by the AANA, the Environmental Code is regulated by a related self-regulatory advertising body, Ad Standards, which investigates complaints and subsequently publishes its rulings. It should be noted that Ad Standards is not authorised to impose fines, it can only order the removal of non-compliant advertisements and publicly list the offending businesses. The offending business can be pursued through the courts for breaches of the Environmental Code if s18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) is also contravened. That is, if the information amounts to misleading or deceptive conduct. If this is proven in the Federal Court of Australia, financial penalties will apply.

Industry Impact

The Environmental Code is intended to ensure that businesses exercise greater diligence when making environmental claims in the process of advertising. Businesses are assumed to undertake internal reviews of marketing content, seek independent verification for environmental statements, and ensure relevant employees are trained on the provisions of the Environmental Code. Time will tell if this model of self-regulation in the advertising and marketing sphere will be effective in addressing the problem of greenwashing.

Supermarket and Retail Sector Enforcement

To complement the implementation of the Grocery Code and the Environmental Code, the Treasurer announced that an additional $30 million dollars would be allocated to fund investigations and enforcement relating to breaches of the relevant codes and the ACL within the supermarket and retail sector. The additional funding will be applied on an annual basis of $8.5 million dollars per year for the next three and a half years.

This funding is intended to be used to strengthen the ACCC’s capacity to investigate and enforce compliance, reflecting a broader focus on consumer protection and market fairness within the supermarket and retail industry and in relation to consumer claims regarding environmental credentials.

Compliance and Enforcement Approach

Each year, the ACCC announces its new Compliance and Enforcement priorities. For 2024 and 2025, its priorities were competition, consumer fair trading, and pricing regulation.

When determining whether the ACCC is to pursue a matter for potential breaches of ACL, it will consider whether the conduct:

1. is of public interest or concern;
2. results in substantial consumer or small business disadvantage;
3. negatively influences other market participants; or
4. relates to an emerging market issue and is likely to affect consumers’ confidence in the regulation of ACL and the codes.

It should be noted that the ACCC is not authorised to determine a breach of the Act, as only a court can decide that a contravention of the law or a code has occurred. Should the ACCC commence legal proceedings, the proceedings will commence in the Federal Court of Australia and, if successful, the court will impose penalties on the breaching party.

Key Takeaways

1. Large-scale supermarket and wholesale businesses must implement compliance frameworks to meet the new obligations under the mandatory Grocery Code.
2. All business owners, senior business managers and advertising executives should conduct regular reviews of marketing operations to ensure that all advertising meets the rules of the Environmental Code.
3. Businesses at all levels should prepare for increased regulatory scrutiny as the ACCC strengthens its regulation and enforcement of Australian competition and consumer law.

How can BSM Sydney Lawyers assist you?

The commercial lawyers at Brander Smith McKnight Sydney Lawyers, remain up to date with the most recent legislative changes. We are able to assist businesses at all levels. The experienced commercial lawyers regularly review business practices to ensure that they adhere to codes of conduct and business law. We can provide advice and ensure compliance with the recent reforms to competition and consumer law, being the mandatory grocery code for large scale enterprises and the environmental code for advertising of business at all levels. It is important to note that the ACCC plan to strengthen its regulation and enforcement of competition and consumer law so it is wise to closely adhere to the guidelines. Contact BSM Sydney Lawyer for a complimentary 20-minute initial consultation to discuss how we can assist you.

FAQs

BSM Lawyer Sydney has conveniently located offices at Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.