Dynamic Business Logo
Home Button
Bookmark Button

A grocery bag full with fresh vegetables isolated on white background

Competition chief warns of pitfalls in grocery industry code

The nation’s competition tsar has highlighted shortcomings with the proposed grocery industry code intended to limit unfair practices and establish clear conduct guidelines in the sector.

Head of the Australian Competition and Consumer Commission, Rod Sims, said the code would be more effective if retailers and suppliers were not granted the option of “contracting out” out of its provisions.

“This raises an issue of whether the code will address the problems which industry has identified if norms of conduct in the code are able to be traded away, rather than always enforceable,” Mr Sims said.

The voluntary code was agreed to by supermarket giants Coles and Woolworths, suppliers and the Australian Food and Grocery Council (AFGC) in November 2013 and sought to establish a number of guidelines to govern relations between retailers and suppliers.

While the ACCC is pushing for the terms of the code to be legally enforceable, Coles and Woolworths are concerned it might be interpreted too strictly and hamper their ability to negotiate side-deals.

Mr Sims concerns go to the issue of Coles and Woolworths leveraging their influence to force smaller suppliers to trade away the protections contained in the code.

Speaking at the Australian Food and Grocery Council’s Industry Leaders Forum in Canberra, Mr Sims warned against the code being watered down and losing its meaning.

He also backed the recent draft competition report conducted by Professor Ian Harper and said that the food and grocery sector stood to benefit from a number of proposals contained in the document.

“On road infrastructure provision and pricing, we support the panel’s recommendation on introducing cost-reflective road pricing linked to road construction, maintenance and safety,” Mr Sims said. “Importantly, more effective road user charges can be offset by lower fuel taxes which currently account for one quarter of fuel prices.

“The ACCC also welcomes the draft recommendations to deep competition in liner and coastal shipping services. This will also reduce your production costs.”

Master Grocers Australia chief executive Jos de Bruin told Dynamic Business that any industry code needed to be both mandatory and enforceable.