Dynamic Business Logo
Home Button
Bookmark Button

New Code aims to ensure fair food and grocery dealings

Minister for Small Business Bruce Billson has introduced the Food and Grocery Code of Conduct, launched to safeguard commercial dealings between Australian retailers, wholesalers and suppliers.

The Competition and Consumer (Industry Codes—Food and Grocery) Regulation 2015, set as a code on 26 February 2015, will aim to improve business relationships throughout the supply chain of Australia’s grocery sector.

The new code will see retailers and wholesalers obliged to enter into written supply agreements; required to meet minimum standards of behaviour in dealing with suppliers, including an “obligation to act in good faith and a prohibition against threatening suppliers” driving business disruption or termination without reasonable grounds; and given dispute resolution mechanisms.

“The code does not override the existing provisions of the Competition and Consumer laws but will improve the transparency of commercial dealings in the sector,” Mr Billson clarified in his official media release.

“This will help to prevent instances of unconscionable conduct, and enhance the ACCC’s capacity to take action against misleading or deceptive conduct and misuse of market power.”

The Australian Competition & Consumer Commission (ACCC) welcomed the introduction of the code, which they say will provide “a clearer framework” for commercial dealings between Australian retailers, wholesalers and suppliers.

“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.”

Mr Sims says he expects Coles, Woolworths, and the Australian Food and Grocery Council (AFGC), who all helped developed the code, to sign up shortly.

Mr Gary Dawson, AFGC CEO, called the new code “a real circuit breaker in retailer supplier relations.”

“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,” Mr Dawson said.

“The Food and Grocery Code establishes a clear set of principles relating to key aspects of trading relationships between retailers and suppliers and will provide greater certainty and clarity about dealings in the industry without adding unnecessary complexity or cost.”

The new code comes after Coles was found guilty of “unconscionable conduct” against small business suppliers and was ordered to pay $10 million in penalties.

“There can be a significant imbalance in bargaining power between suppliers and large grocery retailers and wholesalers. The code seeks to limit some of the conduct that was brought to the ACCC’s attention during our supermarket suppliers’ investigation” Mr Sims said.

“The new code, together with the recent Court judgment that Coles acted unconscionably, makes it clear that no matter how much bargaining power a retailer holds, they must deal with their suppliers fairly.”

Mr Billson said the code will be reviewed three years after commencement.