AGFC Food and Grocery CodeIn March 2015 Aldi was the first of the major supermarket chains to sign up to a new voluntary Supermarket Code of Conduct. Metcash IGA said it would implement the code on a trial basis for 12 months. The code gives the ACCC more power to investigate complaints by suppliers.

In November 2013 the Australian Food and Grocery Council (AFGC) and Australia’s two largest supermarket retailers, Coles and Woolworths reached an agreement on the terms of a new supermarket code of conduct. The code aimed to establish fairer relationships between retailers and suppliers, but was generally rejected by farmers because of its voluntary nature.The key principles of the Food and Grocery Code, according to the  AFGC, are:

  • 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.

However, farmers claimed that an existing voluntary code, established by the Federal Government in 2000 and overseen by an ombudsman, had failed to address the market power of Coles and Woolworths. They claimed that the new agreement was a defensive strategy  prior to the Federal Government’s review of the Competition and Consumer Act and called for a mandatory supermarket code of conduct.

For more about regulation in the food and grocery industries generally (including a case for less regulation), there’s a comprehensive report from Deloitte titled  Reforming regulation of the Australian food and grocery sector.  It was commissioned by the AFGC in 2013.