Food and Grocery Industry Code of Conduct legally enforceable

Aldi and Metcash are both on board for the new legally enforceable code developed by Coles, Woolworths and the Australian Food and Grocery Council.

On Tuesday 3 March 2015 the Food and Grocery Industry Code of Conduct (the Code) was declared to be a legally enforceable, voluntary prescribed code under the Competition and Consumer Act.

“Signing onto the Code will be a mark of the retailers commitment to fair dealing and to improving the operation of one of the most dynamic and competitive sectors of the economy – the fast moving consumer goods sector,” said AFGC CEO Gary Dawson.

The Code aims to deliver more contractual certainty in trading relations between suppliers and supermarkets and encourage the better sharing of risk and reduce inappropriate use of market power across the value chain.

It sets out clear obligations to ensure key elements of Grocery Supply Agreements are discussed and agreed up front.

The Code does not seek to impose overly restrictive rules on commercial negotiations, but rather provides commercial flexibility within a set framework of requirements and controls on behaviour.

Key aspects of the Code:

  • The requirement for retailers and wholesalers to act in good faith
  • The requirements of agreements between retailers or wholesalers and suppliers, including that they be in writing
  • Tough restrictions on retrospective and unilateral variations to grocery supply agreements and the requirement for any variation and the reason to be in writing,
  • Greater transparency on the basis of shelf allocation for branded and private label products;
  • Recognition of the importance of intellectual property rights and confidentiality in driving innovation and investment in new products; and
  • A low cost and fast track dispute resolution mechanism.

The Code was tabled in Parliament earlier this week.

The ACCC will regulate the Food and Grocery Code of Conduct.

 

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