Life's pretty sweet if you're Coles or Woolies. You have market power. Supermarket power. You make your own rules. You can tell shoppers that your Italian par-baked bread is fresh local produce. You can steal suppliers' secrets to make a cheaper own brand replica, and then give it the best shelf spot. That's livin'.
It's all fun and games until the ACCC comes along with their 'truth in advertising' and 'fair play for suppliers' rules. Following the commencement of an ACCC investigation into Coles and Woolies' market power, the Australian Food and Grocery Council has announced an agreement with Coles and Woolies on a Food and Grocery Code.
The Code aims to address the massive imbalance in bargaining power between Coles and Woolies and their suppliers. It limits Coles and Woolies' ability to make one-sided contract variations and requires greater transparency about shelf allocation rules. It also requires that Coles and Woolies not steal suppliers' intellectual property and trade secrets in order to make their own home brand products.
We don't buy it. There are existing, strong legal protections for intellectual property and trade secrets. If suppliers don't enforce their rights now, why would they enforce them under the Code? There are dispute resolution procedures in the Code, and it tries to stop Coles and Woolies de-listing products for nefarious reasons. But we're not convinced that the Code will work. In these tough times for retail no one will want to be the guinea pig.
We say bring on an ACCC prosecution. That might really shake things up.
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