Coles, Woolworths urged to sign grocery code of conduct

Sue Mitchell
February 24, 2015
The Age
A grocery industry code of conduct aimed at curbing unfair treatment of suppliers by the major supermarket chains will be enacted within days, more than two years after talks commenced between Coles, Woolworths and the food and grocery industry.
The Minister for Small Business, Bruce Billson, said the code had been significantly strengthened after an extensive consultation process to prohibit “unacceptable” practices and unfair changes to supply agreements that might not have been banned under the original proposal agreed to by Coles, Woolworths and the Australian Food & Grocery Council in November 2013.
The code had also been amended to accommodate wholesalers such as Metcash, which has previously claimed that the code does not apply to its wholesale business model.
Mr Billson said the code, which will be prescribed under competition and consumer laws and enforced by the Australian Competition and Consumer Commission, was expected to be in place by next week and urged Coles, Woolworths, Aldi and Metcash to sign up.
“Given the work (that has been done) and the collaboration we see no good reason for any of the major supermarket chains not to sign up quite quickly and bring into effect this important reform,” Mr Billson said.
“We have also made a new category of wholesaler which is intended to accommodate the Metcash business model and to recognise that suppliers have had challenges with Metcash,” he said. “I’ve done what can be expected and I hope they will recognise that too.”
Mr Billson dismissed suggestions that Coles and its parent Wesfarmers were losing interest in the code after Coles implemented its own supplier charter and agreed to settle an unconscionable conduct action brought by the ACCC.
“I’ve been assured that Coles remains fully committed to the implementation of an industry-wide code which they’re keen to be a party to,” Mr Billson said.
Coles spearheaded the original negotiations with Woolworths, the Australian Food & Grocery Council and the National Farmers Federation in mid-2012. But Wesfarmers managing director Richard Goyder said last week that it was not Coles job to ensure the code was put in place – “We have our own charter – we don’t see it as our job to see it happen, it’s in the hands of politicians”.
Mr Goyder also questioned the value of the code if other players did not sign up. “I’ve always had a strong view it should not be just Coles and Woolworths but all the players if it’s going to have any impact,” he said.
Mr Billson said he was expecting “full participation” in the code. “As far as the government is concerned the code is finalised – there is no backstepping on it,” he said.
AFGC chief executive Gary Dawson also urged all retailers to sign up.
“Only weeks ago the federal court found Coles guilty of deliberately and repeatedly breaking the law in its treatment of suppliers,” Mr Dawson said.
“Many suppliers are yet to be convinced that that culture of illegal threats and extortion really has changed within Coles. That’s why signing up to the code and meeting the commitments it has made during the code negotiations is such an important test for Coles,” he said.
Mr Billson said the code would be reviewed in three years and if it were found to be ineffective the government will consider a mandatory regime.
“We are about ensuring that businesses big and small can thrive and prosper in this economy – if that means further intervention … we’re not shut off to that,” he said.
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