ACCC raises concerns about supermarket delisting notices

8 November 2016

Supermarkets need to improve the way they notify suppliers when delisting their products to avoid breaching the Food and Grocery Code of Conduct, ACCC Chairman Rod Sims said today at the Australian Food and Grocery Council’s forum in Canberra.

The Code provides default protections to all Aldi, Coles and Woolworths suppliers as of 1 July this year. Under the Code, supermarkets can only delist a supplier’s product for genuine commercial reasons and must give reasonable written notice. Supermarkets must also inform the supplier of their right to have decisions reviewed by a senior buyer.

Mr Sims said the ACCC has raised its concerns with Aldi, Coles and Woolworths following recent compliance checks known as Code audits.

“Some delist notices did not give suppliers reasonable notice; the worst examples were delistings that appear to have occurred on the same day as the notice was served,” Mr Sims said.

“Some delist notices did not include any real reasons for delisting and where reasons were provided, they were typically very general in nature.”

“In some instances, retailers largely cited a failure to meet ‘commercial sales or profitability targets’ without providing any real detail,” Mr Sims said.

Mr Sims said the ACCC is looking at these concerns closely and expects the supermarkets to address them quickly.

He said the delisting notices and other issues raised in the AFGC survey were disappointing as the supermarkets are working to make real and positive changes to their dealings with suppliers.

Mr Sims also stressed to the food and grocery sector that the ACCC is cracking down on large businesses that make misleading health claims.

“If you are going to put a so-called ‘health halo’ on your product make sure you don’t create an overall impression that is likely to mislead," Mr Sims said.

He said claims about health benefits of food are important triggers for consumers who want to make healthy choices.

“Those [claims] directed to choices for children are particularly important and hence some of our recent enforcement activity,” Mr Sims said.

He listed Heinz Little Kids Shredz, Unilever’s Rainbow Paddle Pops, and Smith’s Sakata Paws Pizza Supreme Rice Snacks as recent examples.

Mr Sims also provided an update on the ACCC’s work in agriculture including the cattle and beef market study and the recent report on the horticulture and viticulture industries.

Reporting on dairy issues, he said the ACCC has commenced a dairy inquiry this month, which will continue into 2017. Mr Sims also said the ACCC’s investigations into Murray Goulburn and Fonterra have reached an advanced stage. 

In the final part of his speech, Mr Sims spoke about the important work the ACCC is doing behind the scenes on free trade agreements.

“If our trading partners have competition laws that apply to all commercial activities and they have independent competition authorities that enforce those laws in a fair and non-discriminatory manner, this will help to ensure trade liberalisation is not thwarted by ‘behind the border’ barriers,” Mr Sims said

“To this end, the ACCC is assisting DFAT on competition issues in relation to the negotiation of a number of FTAs.”

Read the Chairman's speech

 

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