ACCC Raises Concerns about Implementation of the Food and Grocery Code
Friday 2 October 2015 @ 9.12 a.m. | Legal Research | Trade & Commerce
The Australian Competition and Consumer Commission (the ACCC) is investigating reports about the approach supermarket retailers are taking to implement the Food and Grocery Code of Conduct (the Code).
Background to the Code
The ACCC is responsible for enforcing the voluntary Code [Competition and Consumer (Industry Codes—Food and Grocery) Regulation 2015 SR 2015, No 16] and the Code is prescribed under the Competition and Consumer Act 2010 (Cth) (the Act).
Major retailers such as:
- Coles;
- Woolworths
- Aldi; and
- Sydney-based retailer About Life
have already signed up to the Code.
Why the need for the Code?
The Code has rules about Grocery Supply Agreements (GSAs), payments, termination of agreements, dispute resolution and a range of other matters. It is a voluntary code which complements existing protections under theCompetition and Consumer Act 2010 (Cth), including the unconscionable conduct provisions.
The Code provides for an additional framework for dealings between retailers or wholesalers and suppliers. The Code does not override the existing provisions of the Act and the Australian Consumer Law [contained in Sch 2 of the Act]. In particular, the provisions relating to unconscionable conduct, misleading or deceptive conduct and misuse of market power continue to apply.
Under the Code, retailers are required to offer suppliers code-compliant GSAs – whether the agreements are new, or variations to existing ones.
Commenting in a recent ACCC Media Release on the purpose of the Code, the Chairman of the ACCC, Rod Sims said:
“The aim of the Code is to redress the imbalance in bargaining power that can exist between suppliers and large grocery retailers by prohibiting certain types of unfair conduct … The Code imposes a duty to deal with suppliers in good faith and we are concerned by reports we have received from suppliers that suggest that some retailers have not got off to a good start when it comes to implementing the Code.”
Why is the ACCC concerned?
According to the ACCC Chairman, the ACCC is concerned that:
“… the manner in which some retailers, in particular Woolworths and Aldi, are presenting new Grocery Supply Agreements (GSAs), which might give the impression that the supplier is not able to negotiate the terms of the GSA. The ACCC is also concerned about the low level of detail provided in some GSAs about the circumstances in which certain payments may arise … 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. In order to provide that certainty, the ACCC expects retailers to set out the circumstances in which they will seek payments from suppliers.”
Response from Retailers
The ACCC has written to retailers about the manner in which they purport to be giving effect to the Code. The retailers have responded providing their new GSAs and the correspondence they have sent to suppliers offering the new GSAs. The ACCC will continue to monitor compliance with the code.
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Sources:
Food and Grocery Code of Conduct
ACCC concerned over implementation of the Food and Grocery code – ACCC Media Release MR 185/15
