Retailers rejects AFGC’s anti-competitive regulatory proposals

Posted by AFN Staff Writers on 23rd May 2012

The Australian National Retailers Association (ANRA), which represents the major supermarket and retail groups in Australia, has told an Australian parliamentary inquiry into Australia’s food processing industry that it opposes the idea of a supermarket ombudsman.

The Australian Food and Grocery Council (AFGC) which represents most of the supplier Brands for food and grocery products in its membership of Australian-based manufacturers and importers, has been vocal in its support for the introduction of a supermarket ombudsman. The Supermarket Ombudsman would have the function of investigating and resolving disputes between any large retailer and a supplier.

Speaking to the Senate Select Committee Inquiry into Australia’s Food Processing Sector hearing last week, the ANRA, Chief Executive said a supermarket ombudsman is “not necessary”.

ANRA’s Chief Executive, Margy Osmond told the Senate hearing that the ANRA believes that the Horticulture Code of Conduct and the Australian Competition and Consumer Act provide the necessary framework to ensure fair and appropriate conduct during commercial relationships.

“These regimes cover all businesses in the supply food chain and do not single out large operators simply because they drive a hard bargain to the benefit of consumers,” Ms Osmond said.

Retailer criticism of AFGC’s ‘Code of Conduct’ idea

In conjunction with the idea of a supermarket ombudsman, the AFGC has also been calling for the introduction of a new ‘Code of Conduct’ to regulate “acceptable approaches for trading terms and contract negotiations”.

The AFGC has stated that the power imbalance between manufacturers and the two major retailers in Australia has reached the point where manufacturers have no leverage at all and there is a “market failure”.

At the inquiry hearing last week, the ANRA’s Margy Osmond said the AFGC’s Code of Conduct would, in fact, limit competition that requires a change to the current regulatory system.

Ms Osmond told the hearing, “I understand that the AFGC has said in its testimony to this inquiry that Aldi would not be covered by their proposed code and would, for example, be able to continue stocking all their shelves with private label goods while Coles and Woolworths faced restrictions on how it managed shelf space.

“This would only act to limit the ability of Coles and Woolworths to compete with new entrants and drive prices higher for mums and dads, making the AFGC supermarket ombudsman and associated regulations highly anticompetitive,” Ms Osmond said.