Gary Dawson, chief executive of the Australian Food and Grocery Council, called the Food and Grocery Industry Code of Conduct an “historic step towards levelling the playing field for food and grocery suppliers in their transactions with the major supermarkets.”
Last week, the minister for small business, Bruce Billson, launched the code, which includes an obligation to enter into grocery supply agreements in writing, minimum standards of behaviour in dealings with suppliers and dispute resolution mechanisms to assist suppliers.
“We congratulate the government for progressing the code as an industry-led solution to problems impacting on suppliers and consumers,” said 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.”
However, while the automatically cover suppliers, it only binds those retailers and wholesalers that agree to sign on to it. Supermarket majors Coles and Woolworths have already said they will sign the code, though Metcash has so far refused to join.
As Jos de Bruin of the Master Grocers Association told SmartCompany, enforcement is critical.
“My belief is that if the code is not enforced, then it’s not worth the paper it’s written on. And likewise, if the big supermarkets can just opt in and opt out when they like, it’s not going to make much of a difference,” he said.
But the AFGC’s Dawson is optimistic that his industry will buy in. “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,” continued Dawson.
“[It] 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.
Key aspects of the code:
- 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
- A low-cost and fast-track dispute-resolution mechanism