The Australian Food and Grocery Council (AFGC) and Australia’s two largest supermarket retailers, Coles and Woolworths, have reached an agreement on the terms of a food and grocery industry code of conduct.

The Food and Grocery Code establishes a clear set of principles relating to key aspects of trading relationships between retailers and suppliers, which the AFGC said will provide “greater certainty and clarity” about dealings in the industry without adding complexity or cost in a fast moving consumer goods sector.

Key aspects of the Code include:

• Tough restriction 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

• A low cost and fast-track dispute resolution mechanism

Agreement on the terms of the Code is the culmination of many months of discussion between the parties and the AFGC said it highlights “constructive dialogue and goodwill across the sector”. It is hoped other retailers and industry groups will agree to the Code.

It is proposed that the Food and Grocery Industry Code will be prescribed by the Federal Government under the Competition and Consumer Act.

The agreement on the terms of the Code was reached today at the inaugural meeting of the Retailer and Supplier Roundtable in Canberra. The Roundtable is a food and grocery industry initiative to facilitate collaborative approaches on relevant issues.

FoodLegal supermarket supplier relationship symposium

Today’s announcement was foreshadowed at a FoodLegal symposium held in Sydney last week, where representatives from Coles supermarket group and the AFGC spoke about the development of the Code.

Robert Hadler, General Manager Corporate Affairs for Coles, told the symposium that a voluntary code was preferable to a mandatory code, in part because a mandatory code embedded a “conflict approach”. He said a prescribed code had the advantage of being collaboratively developed by suppliers and retailers, which made it “commercially realistic”.

Dr Geoffrey Annison, Deputy Chief Executive AFGC told the symposium that signatories to a prescribed Code of Conduct would be bound by the terms. He said the Code aimed to “establish a level playing field by providing a framework for doing business that respects contractual freedom, ensures competitiveness, encourages better sharing of risk and promotes collaboration”.

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