Australian supermarkets must treat their suppliers fairly and provide consumers with the lowest possible prices, but heavy-handed regulation could have unintended consequences.

“The Australian Chamber of Commerce and Industry acknowledges the interim report of the Food and Grocery Code of Conduct independent review,” ACCI chief executive officer Andrew McKellar said.

“It is a considered report that raises some important issues for businesses and consumers, particularly the extent of competition in the supermarket sector and how to ensure that consumers and suppliers get a fair deal.

“Our concern is to ensure that businesses in the supply chain get a fair deal all the way back to the farm gate.

“If there is clear evidence of market failure, where major supermarket operators exercise an unwarranted degree of market power, then of course there would be grounds to address that through regulation and legislation.

“ACCI understands the rationale behind making the code mandatory, but the government needs to be cautious when introducing significant regulatory requirements that could set significant precedents.

“There needs to be further consideration of the likelihood that measures introduced for one sector will create an expectation of equivalent regulatory extensions to other areas of the economy where there is deemed to be a significant concentration of activity among large firms.

“ACCI looks forward to further consultation on the proposed changes to ensure that businesses throughout the food supply chain are treated fairly and competition is allowed to flourish.”