McLeod bullish on code

Sarah-Jane Tasker
June 05, 2013
The Australian

COLES chief Ian McLeod is confident the supermarket industry can adopt its own code of conduct to govern supply contracts and negotiations.

Mr McLeod said yesterday the outstanding issues would be resolved, though further talks were needed.

He used a speech at an American Chamber of Commerce luncheon in Sydney to push his case for the benefits of lower prices to Australian consumers, at a time when the corporate regulator is investigating complaints that Coles and Woolworths have abused their market power in dealings with suppliers in order to cut prices.

The Australian Competition & Consumer Commission is also closely watching the supermarket giants’ move to create an industry code for supply contracts and negotiations, with the regulator preferring mandatory rules.

The supermarkets and food and grocery suppliers have been negotiating the terms of a voluntary code and are said to be close to finalising details with the Australian Food Grocery Council.
Mr McLeod told The Australian, on the sidelines of the event, that there weren’t any “sticking points” that could not be resolved to finalise a voluntary code.

“The dialogue continues to be very constructive and I’m pretty confident that we are going to get a voluntary code that will be satisfactory and beneficial for all parties,” he said.

“Our view is that with a code like that the problem is to make sure that everybody is covered by it, all the suppliers and key retailers. There are one or two points that require further discussion but I’m confident that with good will on both sides we can resolve that.”

Mr McLeod used the bulk of his speech to outline the benefits of Coles’ push to drive prices lower, highlighting that the company had saved families an average of $450 on their grocery bills.

He said there were many critics of big businesses such as Coles and the retailer’s determination to lower prices for the Australian customer had not been met with universal applause. “Some politicians think because these big companies don’t vote they are easy to tackle . . . they fail to recognise that the big companies aren’t faceless, they employ millions on people and all of them vote,” he said.

The Coles boss said the cost of living was the No 1 concern in every customer survey it did.
He warned that politicians who argue for caps on supermarket growth were supporting higher prices for Australian families and fewer jobs for local communities, arguing that the opponents should remember that the 18 million customers who want lower prices, also vote.

Mr McLeod also said that while its $1 per litre milk initiative had been controversial, Coles remained focused on providing lower priced milk for its customers.

He added that a deal with Murray Goulburn to build two milk-processing plants to supply Coles with house-brand milk under a 10-year contract starting in June next year was a “game changer” for the Australian dairy market.