Woolworths, Coles sign voluntary grocery code

Woolworths, Coles sign voluntary grocery code

Australia's largest supermarkets, Woolworths Ltd and Coles, have signed up to a new code of conduct governing food and grocery supplier relationships.

The Food and Grocery Code was inked at the inaugural meeting of the Retailer and Supplier Roundtable in Canberra.

The agreement establishes a "clear set of principles" for dealings between retailers and suppliers, the Australian Food and Grocery Council (AFGC) said today (18 November). According to the industry association, the code will provide "greater certainty and clarity" without adding complexity or cost.

Key aspects of the code include restrictions on retrospective or unilateral variations to supply agreements and a low cost, fast track dispute resolution system.

The code also looks to address how retailers use own-label and branded products.

In Australia's highly competitive and consolidated grocery market, the supermarket majors have worked to develop their own-label offerings as a point of difference and in order to drive value for consumers. The code will require "greater transparency" on shelf allocation for branded and private-label products. It also recognises intellectual property rights and "confidentiality" in driving innovation.

The AFGC said it has proposed that the code will be prescribed by the Federal Government under the auspices of the Competition and Consumer Act.

The Australian Competition and Consumer Commission (ACCC) is currently carrying out two investigations into the Australian supermarket sector. One looks at the relationship of Australia's supermarkets to suppliers and the other examines alleged misuse of shopper dockets.

Speaking last month at an AFCG forum, ACCC chairman Rod Sims said it is "simply incorrect" to label those who question the market power of the major supermarket chains as "people wanting to protect inefficient businesses".

"We see the supermarket issues capable of being dealt with under the Competition and Consumer Act, and we do not see use of the Act as excessive regulation. Indeed, effective implementation of the Act is vital for the success of our market economy. It provides clear and wide boundaries within which we can all benefit from the power of the profit motive," he commented.

According to Australian reports, the ACCC has indicated the voluntary code is not enough to assuage its concerns over the power of the supermarkets and the competition watchdog will continue to investigate the issue.