Would the Supermarket Code of Conduct be going ‘back to the future’?

Posted by AFN Staff Writers on 18th March 2013

The Australian Federal Government could abandon plans for a voluntary code of conduct in favour of a mandatory code, enforceable by the Australian Competition and Consumer Commission (ACCC).

According to various sources, the Australian Government is considering a mandatory code if negotiations for a voluntary code fail. If a mandatory code of conduct is developed, it could be similar to the UK’s Grocery Supply Code of Practice, which is enforced by a supermarket Ombudsman.

Negotiations towards the supermarket code of conduct are continuing independently of separate investigations by the ACCC of allegations against the  supermarket giants Coles and Woolworths concerning market power misuse and unconscionable conduct in negotiations with suppliers. Recently, Australian Food News reported that Woolworths was facing criticism after it said competitor Aldi was increasing pressure on Woolworths to expand its private label range.

There is an irony that people seem to have forgotten Australia has already had a Produce and Grocery Industry Code of Conduct, and a grocery industry Ombudsman – a role that was fully funded by the Australian Government. This Code of Conduct appears to have died of neglect around 2007 after the election of a Federal Labor Government.

Signatories to this previous Code included Coles, Woolworths, the Australian Food and Grocery Council (AFGC), the Australian Retailers Association, the National Farmers’ Federation, the Australian Egg Corporation Limited (AECL), Australian Dairy Farmers, and the Horticulture Australia Council. Members of the Committee included representatives from Coles and Woolworths, as well as other retail and farmers’ groups.

The previous Code of Conduct came under review last in September 2007 when the Produce and Grocery Industry Code Administration Committee (PGICA) met to discuss the effectiveness of the code and the Ombudsman. Chairman of the PGICA at the time, Ian Davis, a partner at Minter Ellison, said that the committee would be “dedicated to meeting the needs of industry, minimising disputes and improving the trade environment for industry participants”.

That was before the 2007 Federal election, which saw the Liberal Coalition lose office.

The elected Labor government led by the then Prime Minister Kevin Rudd promised an ACCC-based enquiry into the grocery industry. No changes in the laws were made, nor any moves against the major supermarket groups.

The current Federal Labor government now led by Julia Gillard is very unpopular and facing a difficult election scheduled for 14 September 2013.

A Code of Conduct for the grocery industry seems to be a perennial issue prior to Federal elections.

For more information on the 2007 Supermarket Ombudsman’s role, see http://www.produceandgrocerycode.com.au/ombudsmanrole.htm