Concerns supermarkets maybe using supplier product details to own benefit

Posted by AFN Staff Writers on 27th January 2016

Trolley 1A former executive at Kellogg’s Australia has claimed in an article appearing in Fairfax’s Sydney Morning Herald and The Age newspapers that the supermarket majors Woolworths and Coles could be using supplier information to help develop private label products.


Speaking to Fairfax, Jean-Yves Heude, who worked at Kellogg’s for over 10 years said the supermarkets ask for sensitive information from suppliers to help justify pricing. Heude is however concerned this type of information could be used to help copy products.


Meanwhile, Joe Lederman, a principal of law firm FoodLgeal told Australian Food News that food producers should be careful with product details, especially recipes.


“Manufacturers ought not yield any secret under pressure. It is not a food safety issue or a food audit concern. Everyone recipe should be sacrosanct as it is valuable intellectual property and worth a lot of money,” Lederman said.


Australian Competition and Consumer Commission (ACCC) chairman Rod Sims told Fairfax that it has not yet found sufficient evidence to accuse supermarkets of this type of behaviour despite concerns being raised in recent years.


“You need more than just the sharing: we need to prove it’s got a negative effect on competition,” he said.


FoodLegal’s Lederman said that the negative effect would be be difficult to measure except if the supplier’s branded product is put out of business.


“The law and its legal test should be amended to counter such conduct without the need to look at a measurement f the market impact,” Lederman said.


Coles responded to the concerns raised by Heude with the following statement:


“As part of our commitment to lowering the cost of a weekly shop for our customers, Coles has requested suppliers justify requests for price increases for several years. Prior to Coles introducing this requirement, many suppliers would seek to raise prices every year – in some cases ahead of inflation or any increase in input costs.”


“This focus on wholesale prices, along with driving efficiencies throughout our business, has enabled Coles to lower the average cost of a weekly shop every year for more than six years.”


Woolworths said that it worked co-operatively with suppliers in-line with the code of conduct to keep prices down.