ACCC reminds suppliers of their rights under Food and Grocery Code

25 August 2016

All suppliers to Coles, Woolworths and Aldi now have the full benefit of the Food and Grocery Code of Conduct (Code).

“Reports received by the Australian Competition and Consumer Commission suggest that a majority of suppliers have chosen to enter Code compliant grocery supply agreements (GSAs) with the supermarkets. It is important to recognise that from 1 July 2016, suppliers of Aldi, Coles and Woolworths who had not yet signed new GSAs still have the default protections provided by the Code, which overlay their existing terms,” ACCC Chairman Rod Sims said.  

“Suppliers who have negotiated and signed agreements with the supermarkets, however, have the benefit of clarity of terms.”

At least 1,500 suppliers have undertaken training on the Code. Under the Code, supermarkets must also provide training to their staff.

“We encourage suppliers to use this knowledge to negotiate GSAs with supermarkets,” Mr Sims said.

The Australian Food and Grocery Council has recently publicised the results of a survey that revealed a number of Code-related issues being raised by suppliers including:

  • requests to suppliers for payments to make up shortfalls in supermarket profits
  • specificity of criteria for range reviews and delisting of products. Under the Code, supermarkets must notify suppliers of their product ranging and space allocation principles
  • payment terms.

“The issue of late payment of suppliers’ invoices by supermarkets has recently caused wider public comment. The ACCC is also aware that some GSAs define a 30-day payment term, for example, to mean 45 days,” Mr Sims said.

“The ACCC continues to monitor compliance with the Code and encourages suppliers who have concerns about their dealings with the supermarkets to raise them with the ACCC.”

“We have shown that we can protect supplier confidentiality,” Mr Sims said.

Background

In September 2015, the ACCC flagged concerns with the way supermarkets, especially Woolworths and Aldi, were presenting GSAs to suppliers. In particular, the ACCC was concerned that some supermarkets were:

  • suggesting that the Code required suppliers to sign a GSA
  • suggesting that new GSAs offered by the supermarkets were non-negotiable
  • attempting to opt-out of certain protections under the Code without meeting all of the
    opt-out requirements. 

The supermarkets clarified to suppliers their offers of GSAs with reference to the provisions of the Code being relied upon, and that suppliers were free to negotiate the terms offered.

The ACCC is responsible for promoting compliance with industry codes prescribed under the Competition and Consumer Act 2010 (Cth) (CCA). The ACCC has the power to obtain from a corporation any information or documents it is required to keep, generate or publish under a prescribed industry code. If the information or documents provided indicate a significant or deliberate breach of a prescribed code, the ACCC may take enforcement action.

The Code has rules about GSAs, claiming payments for things like wastage, termination of agreements, dispute resolution, and a range of other matters. The Code complements existing protections under the CCA, including the unconscionable conduct provisions. The Code requires retailers and wholesalers to deal with suppliers in good faith during the bargaining stages of establishing GSAs, during the term of the agreement, and in dealing with any disputes.

 

Release number: 
MR 152/16
ACCC Infocentre: 

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