The Australian Food and Grocery Council (AFGC) and the Australian Competition and Consumer Commission (ACCC) have welcomed the introduction of the Food and Grocery Code of Conduct by Small Business Minister, Bruce Billson, describing the move as a “historic step forward”.
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.
Small Business Minister, Bruce Billson, said the new code, which comes into operation on Tuesday, will improve commercial relationships throughout the entire supply chain of Australia’s grocery sector.
“This is about transparency. This is about openness and predictability for suppliers in dealing with the supermarket chains,” Billson said.
The code applies to retailers and wholesalers, and features an obligation to enter into grocery supply agreements in writing; minimum standards of behaviour in dealings with suppliers, including an obligation to act in ‘good faith’ and a prohibition against threatening suppliers with business disruption or termination without reasonable grounds; and dispute resolution mechanisms to assist suppliers in resolving disputes. The code will only bind those retailers and wholesalers that agree to sign up to it, with suppliers automatically covered by the code.
ACCC chairman, Rod Sims, said businesses that supply groceries to major retailers and wholesalers will have extra protections under the new industry code.
“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,” Sims said.
“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,” 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.
The AFGC said the code is “an historic 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 today 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.
“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,” Dawson said.