Following concerns raised by the Australian Competition and Consumer Commission, the major supermarkets have taken steps to clarify the implementation of the Food and Grocery Code of Conduct (Code) with their suppliers.
Woolworths and Aldi have written to their suppliers clarifying that suppliers are able to negotiate the terms of their Grocery Supply Agreements (GSAs). They have also clarified the effect of the Code on their GSAs and the circumstances in which certain payments may arise.
Coles has explained to suppliers how Coles is implementing the requirements under the Code and clarified that it is prepared to negotiate GSA terms.
The retailers have also confirmed their commitment to the Code and detailed the steps that they have taken to ensure that suppliers are aware of some of the key protections offered by the Code. These steps have resolved the ACCC’s concerns.
“One of the purposes of the Code is to provide certainty to suppliers, who are often in a much weaker bargaining position when dealing with retailers,” ACCC Chairman Rod Sims said
“In order to provide that certainty, the ACCC expects retailers to be specific about circumstances in which they will seek payments from suppliers before they seek such a payment.”
“The ACCC will continue to monitor compliance with the Code and encourages any suppliers experiencing issues with the implementation of the Code to contact the ACCC for a confidential discussion,” Mr Sims said.
“We welcome the commitment given and the actions taken by the relevant supermarkets to address the concerns raised by the ACCC.”
The ACCC is responsible for enforcing the Code and has developed guidance material, which is available at Food and Grocery Code of Conduct.
Aldi, Coles, Woolworths, and Sydney-based retailer About Life have signed up to the Code.
The Code has rules about GSAs, payments, termination of agreements, dispute resolution, and a range of other matters. It is a voluntary code which complements existing protections under the Competition and Consumer Act 2010, 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.
Under the Code, retailers are required to offer suppliers Code-compliant GSAs – whether the agreements are new, or variations to existing ones. Suppliers should not feel compelled to sign these agreements and should seek advice before signing them. In particular, the Code will confer protections on suppliers 12 months after a retailer has signed up to the Code, regardless of whether a supplier has accepted a code-compliant GSA.
Over the last three months, the ACCC has received reports that some supermarkets were presenting GSAs in a manner which imply that they were non-negotiable. The ACCC was also concerned about the low level of detail provided in some GSAs about the circumstances in which certain payments may arise.