Australia’s two largest supermarket retailers, Coles and Woolworths, have finally agreed to a food and grocery industry code of conduct that dictates how they should deal with their food and grocery suppliers.
The voluntary code aims to even up the imbalance in market power between the supermarkets and suppliers and it has been the subject of negotiations between the supermarkets and the Australian Food and Grocery Council (AFGC), for many months.
Key aspects of the code include 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, and a low cost and fast track dispute resolution mechanism.
The food and grocery industry code has been submitted to the Federal Government with a view to having it prescribed under the Competition and Consumer Act.
The AFGC said the food and grocery code establishes a clear set of principles relating to key aspects of trading relationships between retailers and suppliers.
It will provide greater certainty and clarity about dealings in the industry without adding complexity or cost in a fast moving consumer goods sector.
“Agreement on the terms of the Code is the culmination of many months of discussions between the parties and highlights constructive dialogue and goodwill across the sector. It is hoped other retailers and industry groups agree to the Code,” said the AFGC.
The code comes as the Australian Competition and Consumer Commission (ACCC) continues its investigation into alleged market power abuses by the supermarkets when dealing with suppliers.
Coles and Woolworths have agreed to voluntary industry code of conduct that dictates how they deal with suppliers.
