New rights for food and grocery suppliers

The Food and Grocery Industry Code of Conduct has been tabled in Parliament, in a move the AFGC has called “a step towards levelling the playing field.”

The voluntary code prohibits specific types of unfair conduct by retailers and wholesalers in their dealings with suppliers and provides a clearer framework for these dealings. It complements existing protections for suppliers under the Competition and Consumer Act 2010, including the unconscionable conduct provisions.

“Businesses that supply groceries to major retailers and wholesalers will have extra protections under the new industry code,” ACCC Chairman Rod Sims said.

“The code also provides new powers for the ACCC. Once retailers and wholesalers sign up to the code, we will be able to enforce it and take court action for breaches. We will also be able to audit retailers and wholesalers to check that they are complying with the code.”

“Coles, Woolworths and the Australian Food and Grocery Council worked closely to develop the code. We expect these retailers will sign up to it shortly,” Sims said.

The Australian Food and Grocery Council (AFGC) said the tabling in Parliament is a step towards levelling the playing field for food and grocery suppliers in their transactions with the major supermarkets.

AFGC CEO Gary Dawson welcomed the announcement by the Minister for Small business Bruce Billson as integral to achieving a meaningful and enforceable Code that will drive behavioural change to encourage fair and effective competition in the long term interests of consumers.

“We congratulate the Government for progressing the Code as an industry-led solution to problems impacting on suppliers and consumers,” Dawson said. “The Code was developed initially through negotiations with Coles and Woolworths, and it was their willingness to come to the table and develop a meaningful Code that made it possible.

“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.

 “The Code will now be tabled in Parliament as a regulation under the Competition and Consumer Act 2010 to give it real teeth,” Dawson said.

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. 

ALDI Australia has announced it will be signing up to the Code as a party.

A spokesperson for ALDI Australia said "ALDI Australia has always supported the principle of a strong and sustainable Australian grocery industry for both suppliers and retailers, with an emphasis on fairness throughout all business dealings.

"The provisions of the Code reflect ALDI’s current practice with suppliers: forging long term, stable, sustainable relationships and working closely in partnership to provide Australian shoppers with high quality products at permanently low prices."

 

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