Coles and Woolworths to face watchdog

Sid Maher
March 14, 2013
The Australian

THE Gillard government is preparing to turn the Australian Competition & Consumer Commission into a grocery cop by arming it with a mandatory code to police dealings between supermarkets and suppliers.

The Australian can reveal that plans to develop a voluntary code of practice for supermarkets have been ditched in the past few weeks in favour of a mandatory code.

The government is considering, as part of the new mandatory code, giving the ACCC the power to impose sanctions on supermarkets found to have breached the code without having to prove its case in court.

The regime is likely to mirror a similar mandatory code in Britain. But there are fears that the move could force up prices and encourage supermarkets to look oversees for supplies to avoid being caught by the new code.

The mandatory code is being developed as the ACCC probes Coles and Woolworths over how they treat their suppliers.

On Monday, ACCC chairman Rod Sims conceded supermarket prices could rise if his investigation led to successful prosecutions for misuse of market power.

Work on the voluntary code of practice began in September when Agriculture Minister Joe Ludwig and Assistant Treasurer David Bradbury met the food and grocery industry in Sydney. An industry working group was set up, legal advice sought from Gilbert + Tobin and feedback on their report was due late this month.

But that approach was dumped in the past two weeks, with Mr Bradbury and Senator Ludwig flagging they would now pursue a mandatory code. One source familiar with the talks described it as “pure election-year politics”.

Good-faith negotiations on the voluntary code of conduct had agreed it would include: bargaining in good faith; being fair, just and reasonable; taking due care and being responsible; showing respect for commercial relationships; using simple and easy-to-understand terms and conditions; prior agreement between the parties on all terms and conditions; being transparent, and ensuring full disclosure of all information.

The voluntary code had also included: providing adequate time to consider and review agreements and changes; meeting all commitments and making deliveries and payments in full, on time and the implementation of confidential and supportive complaints and dispute-resolution processes.

The moves emerged as Ausveg chief executive Richard Mulcahy said the loss of Windsor Farm Foods in the NSW town of Cowra yesterday was another sign of the need for a “supermarket ombudsman”. He described the closure as “another crushing blow to the already struggling food-processing sector that is trying to stand up under the enormous pressure placed on it from imported foods and the retail sector”.

He said Windsor Farm, which employed 70 workers and operated the last wholly owned cannery in Australia, had been brought to its knees by “a thousand cuts” and it was “another nail in the coffin for Australia’s food-processing sector”.

He said the Gillard government needed to “stop its rhetoric about food plans, Asian centuries and voluntary retail codes, and implement programs that ensure the continuity of Australian jobs and the food-manufacturing sector”.

Additional reporting: Stuart Rintoul