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Woolies and Aldi respond to ACCC probe

Woolworthssign_2Woolworths and Aldi have responded after the Australian Competition and Consumer Commission (ACCC) singled out the two supermarket chains in its announcement of an investigation into arrangements with suppliers.

The watchdog made public the investigation on Thursday, stating it had concerns over how the two chains are “presenting new grocery supply agreements”.

“The ACCC has concerns as to the manner in which some retailers, in particular Woolworths and Aldi, are presenting new grocery supply agreements (GSAs), which might give the impression that the supplier is not able to negotiate the terms of the GSA,” ACCC chairman, Rod Sims, said.

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. Coles, Woolworths, Aldi, and Sydney-based retailer, About Life, have signed up to the code, which came into effect in March 2015.

Woolworths and Aldi have both since hit back, with Woolworths declaring it is a strong supporter of the agreement, and that it is “surprised and disappointed” by the watchdog’s actions.

“We were the first national retailer to commit to sign up to the code and have been working progressively with our suppliers since then to implement it,” Woolworths said.

“A minor wording issue was raised with us in relation to a letter sent to a number of our suppliers offering to amend agreements to amongst other things comply with the grocery code. The wording in question has been used in letters to our suppliers for many years and was designed to avoid changes to agreements being missed or misunderstood.

“Wanting to deal with this issue promptly, two weeks ago we changed the paragraph in the relevant letter. We re-sent letters to suppliers, and at the ACCC’s request have agreed to contact suppliers who have already signed new agreements. Woolworths considers that the code process has worked exactly as it was intended to. We engaged quickly and constructively with the AFGC, the ACCC and our suppliers on this issue.”

Discount supermarket retailer, Aldi, has also rejected the ACCC’s allegations, stating it has “always supported the concept of a strong and sustainable Australian grocery industry for retailers, wholesalers, and suppliers”.

“We respect the role of the ACCC in maintaining a fair and compliant food and grocery industry, and will respond in due course to the specific claims that have been brought to our attention,” an Aldi spokesperson said.

“The spirit of the code reflects Aldi’s current practice with suppliers; forging long term, sustainable relationships and working in partnership to provide Australian shoppers with high-quality products at permanently low prices.”

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