Consultation paper for review of Food and Grocery Code of Conduct released


Date: 5 February 2024

Statement by Dr Craig Emerson, independent reviewer of the Food and Grocery Code of Conduct

A consultation paper for the review of the Food and Grocery Code of Conduct was released on Monday, 5 February 2024, with submissions invited by 29 February 2024.

The Government has asked me to review the Food and Grocery Code of Conduct (the Code) and to recommend whether it should be amended, remade or repealed.

The Code is a voluntary code of conduct with four signatories: Woolworths, Coles, Aldi and Metcash. Suppliers to these signatories are automatically covered by the Code.

Amending the Code would retain it as a voluntary code. Remaking the Code would involve making it mandatory. In my view, repealing the Code and replacing it with nothing is untenable and therefore will not be considered in this review.

The basic reason for the Code coming into existence in 2015 was an imbalance of market power between supermarkets and their suppliers, especially smaller suppliers.

Disputes under the Code can be referred to an Arbiter, who is appointed and funded by each supermarket and whose role is to try to resolve disputes.

Since the introduction of Arbiters in 2021 only 5 complaints have been made to an arbiter.

Supporters of the voluntary Code claim this small number indicates that the relationship between the supermarkets and suppliers is good.

Critics of the voluntary Code argue that suppliers are too frightened to raise a dispute with a supermarket for fear of their product being removed from the supermarket’s shelves.

Critics also point to the weak enforcement powers in a voluntary code.

A mandatory code with penalty provisions would likely incentivise greater compliance by supermarkets. Enforcement options could include infringement notices and court proceedings to impose financial penalties for non-compliance.

Supporters of a voluntary Code argue that ACCC enforcement can take years to go through the courts, by which time the supplier will have gone broke.

However, enforcement through lengthy legal proceedings is not the only option under a mandatory code.

The ACCC has pointed out that the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) can provide parties with access to mediation services. ASBFEO maintains a specialist panel of trained mediators in each state and territory.

The consultation paper seeks stakeholder views on whether the Code should remain voluntary or be made mandatory. It also seeks feedback on how the specific provisions in the Code are working.

The review is part of a wider response to cost-of-living pressures. The consultation paper canvasses some of these policy instruments, including the Government’s decision to ask the ACCC to undertake a price inquiry into the supermarket industry and the commissioning of CHOICE to publish periodically the prices of selected items sold by the various supermarkets.

It is through greater competition between supermarkets that the policy goals of higher prices for suppliers and lower prices for consumers can be achieved.

This review will produce an interim report, followed by a final report based on responses to the interim report.

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