There has been a mixed response from different Australian food and beverage industry sectors to a new voluntary prescribed Food and Industry Code of Conduct by the major supermarkets in conjunction with the Australian Food and Grocery Council (AFGC).

Australian Food News reported on Monday 18 November 2013 that the AFGC, Coles and Woolworths had reached an agreement on the terms of a new food and grocery industry code of conduct.

New voluntary supermarket code “pure spin”, says VFF

The Victorian Farmers’ Federation (VFF) has dismissed the new Code as “pure spin”, saying that voluntary Codes of Practice have not worked in the past.

“Why are Coles and Woolworths laying claim to a new code when they are already signatories to an existing voluntary code, which has failed?” said Peter Tuohey, VFF President.

In 2000 the Federal Government established a voluntary Produce and Grocery Industry Code, which is overseen by an ombudsman.

“The existing voluntary code has failed to help farmers and other supermarket suppliers,” Mr Tuohey said. “So why would anyone want to adopt another voluntary code?” he said.

VFF said Coles and Woolworths already have representatives sitting on the existing voluntary Produce and Grocery Industry Code committee, but that it “has done nothing to address market power”.

“The evidence that voluntary codes fail is reflected in the fact that the Australian Competition and Consumer Commission is investigating 50 supplier complaints against the supermarkets,” Mr Tuohey said. “What we’re seeing is both major supermarkets launching a defensive strategy in the lead-up to the Federal Government’s ‘root and branch’ review of the Competition and Consumer Act,” he said.

Australian Food News reported in October 2013 that Small Business Minister Bruce Billson had announced the Australian Government would undertake a ‘root and branch’ review of competition laws and how these relate to food and beverage manufacturing and retail sectors.

“As far as the VFF is concerned, we support a mandatory code of conduct, but ultimately want the Act strengthened as part of the upcoming review,” Mr Tuohey said. “It’s not just about mandatory codes,” he said.

The VFF said it wants the Act reviewed to:

• Provide the ACCC with divestiture powers.

• Simplify tests for “misuse of market power”

• Statutory definition of “unconscionable conduct”

• Specialised oversight of vulnerable markets to prevent unfair trading/contract terms

• Guidelines to clearly define predatory pricing

• Prohibits anti-competitive creeping acquisitions through strengthening s 50 of the CCA

• Strengthen mandatory codes (E.g: enable strengthened enforcement regimes that are less reliant on vulnerable parties to a transaction bringing and complaint, and removing exemptions that limit the application of codes such as presently occurs under the Horticulture Code of Conduct.)

• Strengthen labelling laws and enforcement

• Better oversight of the impact of shopper dockets on broader competition

• Broaden the provisions of regulated access regimes under the CCA

• Improve the ability of farmers to collectively bargain

But Food and Grocery Code welcomed by Simplot

Meanwhile, the new voluntary prescribed Food and Grocery Code of Conduct has been welcomed by the major food manufacturer Simplot, which has vegetable processing plants in Victoria and Tasmania and the supermarkets as its main customers.

Terry O’Brien, Simplot’s Managing Director and Chair of the AFGC, told the Australian Broadcasting Corporation’s (ABC) Rural news that signing up to the Code will give more power to the smaller food suppliers.

“For some of the smaller members of the AFGC, who not only do not have a great deal of power in the relationship, they even have difficulty getting access in the relationship,” Mr O’Brien told ABC Rural. “It’s a code that can go from the top to the bottom of each organisation. At the lowest levels of both our organisation, these people can talk consistently with the sentiment of both managements of those companies,” he said.

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