Australian Suppliers and Consumers to Benefit From New Grocery Code Of Conduct

02 Mar 2015 --- The tabling in Australian Parliament this week of the Food and Grocery Industry Code of Conduct is an historic step towards levelling the playing field for food and grocery suppliers in their transactions with the major supermarkets, said the Australian Food and Grocery Council (AFGC).

The opt-in code seeks to improve commercial relationships throughout the entire supply chain of Australia's grocery sector, with consumers set to benefit from a more competitive market. Supermarkets will be obliged to enter into grocery supply agreements in writing, with minimum behavioural standards in dealing with suppliers among the new measures. It will also improve the dispute resolution process for the supply chain industry.

AFGC CEO Mr Gary Dawson welcomed the announcement by the Minister for Small business Bruce Billson 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.

“We congratulate the Government for progressing the Code as an industry-led solution to problems impacting on suppliers and consumers,” said Mr Dawson. “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 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 Code will now be tabled in Parliament as a regulation under the Competition and Consumer Act 2010 to give it real teeth,” said Mr Dawson.

Key aspects of the Code include:
• Tough restrictions on retrospective and unilateral variations to grocery supply agreements;
• 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.
 
Mr Dawson also acknowledged Minister Billson’s ongoing commitment in developing the Code.

“The Minister for Small Business has been one of the strongest advocates of the Code, which sets clear ‘no go’ areas, including the types of behaviour that led to recent unconscionable conduct cases. Once in place it will set clearer rules of engagement.”

“It provides a real opportunity to drive changes in behaviour and be a real circuit breaker in retailer-supplier relations by entrenching new standards of behaviour including at buyer level,” said Mr Dawson.