Most Read Contributor in Australia, September 2016
For some time there have been concerns about imbalance in the
relationship between the major Australian supermarkets and their
suppliers. Coles, Woolworths and the Australian Food and Grocery
Council have released a draft Food and Grocery Code of
Conduct (Code), which is aimed at improving
the interactions between suppliers and those retailers to whom the
Code would apply.
The Government and the Australian Competition and Consumer
Commission will now analyse the draft Code before putting it out
for public consultation, which will allow other stakeholders to
also provide input.
The Code (as presently drafted) would only apply to retailers
who have voluntarily agreed in writing to be bound by it. As Coles
and Woolworths (along with the Australian Food and Grocery Council)
have released the draft of the Code, it would appear that at this
stage Coles and Woolworths may be intending to adopt and adhere to
There has been speculation as to whether the Code might become a
prescribed industry code under the Competition and Consumer Act
2010 (Cth). However, this is yet to be clarified.
The Code's Purposes
The Code states that its purposes are to:
help to regulate standards of business conduct in the food and
grocery supply chain and to build and sustain trust and
ensure transparency and certainty in commercial transactions in
the grocery supply chain and to minimise disputes arising from a
lack of certainty in respect of the commercial terms agreed between
provide an effective, fair and equitable dispute resolution
process for raising and investigating complaints and resolving
disputes arising from the commercial dealings between the parties
or otherwise under this Code; and
enable industry participants to monitor the operation and
efficacy of the Code in an industry-wide roundtable.
The Code requires suppliers and retailers to have and maintain
Grocery Supply Agreements and sets out specific requirements which
must be met in those agreements. For instance under the Code,
Grocery Supply Agreements must specify:
that the retailer and supplier are to at all times deal with
each other lawfully and in good faith. Dealings with suppliers are
to be without duress and in recognition of the suppliers' needs
for certainty regarding the risks and costs of trading,
particularly in relation to production, delivery and payment
the circumstances in which a Grocery Supply Agreement may be
The Code also:
prohibits a retailer from requiring a supplier to consent to
variations of a Grocery Supply Agreement;
prohibits a retailer from varying any Grocery Supply Agreement
retrospectively and from demanding or requesting that a supplier
consent to retrospective variations of any Grocery Supply
prohibits a retailer from requiring a supplier to make any
payment in order to secure better positioning or an increase in
their allocation of shelf space for its grocery products; and
set out details for procedures in the event of shrinkage, waste
and product quality and standard issues that are intended to
prevent the supplier from being unfairly treated.
Further, the Code provides procedures for a supplier to utilise
in the event of a dispute arising with a retailer to whom the Code
applies. Suppliers would need to provide the retailer with
sufficient particulars of:
the complaint or dispute;
the conduct that is the subject of that complaint or dispute;
the provisions of the Code that are alleged to have been
breached and the remedy or relief that that Supplier is seeking, to
enable the retailer to investigate, consider and respond to the
complaint or dispute, subject to appropriate confidentiality
protections. The Code contemplates that a retailer will appoint a
Code Compliance Manager who must be independent of the
retailer's buying team. The Code Compliance Manager will deal
with complaints in accordance with a written complaints handling
procedure to be developed by the retailer.
Time will tell what impact the Code might have from the
perspective of Australian agribusiness. It remains to be seen which
retailers will adopt the Code and whether it may change from its
present form in any material ways. It will also be interesting to
see what penalties or sanctions (if any) a breach of the Code might
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Liability was apportioned between the VMO, Dr.Brown, and the hospital on an 80/20 basis in favour of the hospital.
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