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Woolies calls on Aldi to level the playing field

By RJ Whitehead , 10-Dec-2013

It’s shopping bags at dawn in the latest battle in Australia’s supermarket war, with Woolworths pointedly accusing Aldi of not playing fair and urging the discount retailer to sign the same voluntary code of conduct it and Coles had signed last month.

Woolworths also alleged that Aldi’s private label products might be infringing on the intellectual property rights of leading national brands like Bundaberg rum and Kellogg’s Special K.

Under the code of conduct signed by Woolworths, Coles and the Australian Food & Grocery Council, retailers and suppliers are compelled to respect intellectual property rights, including brand names, packaging designs and advertising.

Packaging problems

But speaking to the Australian Financial Review this week, Woolworths regional managing director of supermarkets, Tjeerd Jegen, highlighted some similarities between some national brands and those that were exclusive to Aldi.

"One of our major competitors has 96% of their range that is own-brand," Jegen told the publication. "If you don't look carefully, you'd think it came from suppliers' brands.”

Jegen called on Aldi to sign the voluntary code of conduct, as Woolworths chief executive Grant O'Brien, Coles managing director Ian McLeod, and Wesfarmers chief executive Richard Goyder, have done previously.

"In order to get a level playing field, I can't understand why every retailer is not signing up to the code," Jegen continued, alluding to comments made by Tom Daunt, Aldi’s managing director, that he would support any code that “levelled the playing field”. "Everyone is asking for a level playing field and we're providing it now.”

Step forward

The code was approved in mid-November and includes 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 and a low-cost and speedy dispute resolution mechanism—alongside the intellectual property requirements.

It was immediately popular among an industry that for some time has complained of duopolistic practices between Coles and Woolworths—by far the biggest players in Australian supermarket retail with 80% of the market between them.

The code also drew praise from the government, with small business minister Bruce Billson the agreement will help protect suppliers when negotiating with the major supermarkets.

"It's a clear statement between the parties about the way they will conduct themselves, the respectful nature of those commercial arrangements, the no-surprises basis of commerce rather than seeing a small supplier being told to unilaterally change the pricing or the way in which they engage with the big business," he said at the time.

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