Food and Grocery Code of Conduct applies to all Aldi, Woolworths and Coles suppliers

Suppliers of Aldi, Coles and Woolworths who had not signed new grocery supply agreements (GSAs) by 1 July 2016 still have the default protections provided by the Food and Grocery Code of Conduct (Code), which overlay their existing terms.

The majority of suppliers have chosen to enter Code compliant GSAs with the supermarkets with at least 1500 suppliers having undertaken training on the Code. (Under the Code, supermarkets must also provide training to their staff.)

In September 2015, the ACCC flagged concerns with the way supermarkets, especially Woolworths and Aldi, were presenting GSAs to suppliers. In particular, the ACCC was concerned that some supermarkets were:

• suggesting that the Code required suppliers to sign a GSA;
• suggesting that new GSAs offered by the supermarkets were non-negotiable;
• attempting to opt out of certain protections under the Code without meeting all of the opt-out requirements.

The supermarkets clarified to suppliers their offers of GSAs with reference to the provisions of the Code being relied on, and that suppliers were free to negotiate the terms offered.

The Code has rules about GSAs, claiming payments for things like wastage, termination of agreements, dispute resolution and a range of other matters. The Code complements existing protections under the CCA, including the unconscionable conduct provisions. The Code requires retailers and wholesalers to deal with suppliers in good faith during the bargaining stages of establishing GSAs, during the term of the agreement and in dealing with any disputes.

The Australian Food and Grocery Council has recently publicised the results of a survey that revealed a number of Code-related issues being raised by suppliers including:

• requests to suppliers for payments to make up shortfalls in supermarket profits;
• specificity of criteria for range reviews and delisting of products. Under the Code, supermarkets must notify suppliers of their product ranging and space allocation principles;
• payment terms.

“The issue of late payment of suppliers’ invoices by supermarkets has recently caused wider public comment. The ACCC is also aware that some GSAs define a 30-day payment term, for example, to mean 45 days,” ACCC Chairman Rod Sims said.

“The ACCC continues to monitor compliance with the Code and encourages suppliers who have concerns about their dealings with the supermarkets to raise them with the ACCC.

“We have shown that we can protect supplier confidentiality,” Sims said.