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Independent Review of the Food and Grocery Code of Conduct Final Report

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Independent Review of the Food and Grocery Code of Conduct Final Report Independent Review of the Food and Grocery Code of Conduct Final Report SEPTEMBER 2018 © Commonwealth of Australia 2018 ISBN: 978-1-925504-91-0 This publication is available for your use under a Creative Commons Attribution 3.0 Australia licence, with the exception of the Commonwealth Coat of Arms, the Treasury logo, photographs, images, signatures and where otherwise stated. The full licence terms are available from http://creativecommons.org/licenses/by/3.0/au/legalcode. Use of Treasury material under a Creative Commons Attribution 3.0 Australia licence requires you to attribute the work (but not in any way that suggests that the Treasury endorses you or your use of the work). Treasury material used ‘as supplied’. Provided you have not modified or transformed Treasury material in any way including, for example, by changing the Treasury text; calculating percentage changes; graphing or charting data; or deriving new statistics from published Treasury statistics — then Treasury prefers the following attribution: Source: The Australian Government the Treasury. Derivative material If you have modified or transformed Treasury material, or derived new material from those of the Treasury in any way, then Treasury prefers the following attribution: Based on The Australian Government the Treasury data. Use of the Coat of Arms The terms under which the Coat of Arms can be used are set out on the Department of the Prime Minister and Cabinet website (see www.pmc.gov.au/government/commonwealth-coat-arms). Other uses Enquiries regarding this licence and any other use of this document are welcome at: Manager Media and Speeches Unit The Treasury Langton Crescent Parkes ACT 2600 Email: [email protected] ii Contents Foreword ......................................................................................................................................1 List of Recommendations ..............................................................................................................3 Executive Summary .......................................................................................................................6 1. Introduction ..............................................................................................................................7 The Food and Grocery Code of Conduct .................................................................................................. 7 The Review ............................................................................................................................................... 8 Consultation process ................................................................................................................................ 9 2. Overview of Australia’s Food and Grocery Industry .................................................................. 10 Supermarkets (retailers) and wholesalers .............................................................................................10 Suppliers .................................................................................................................................................12 Commercial dealings between the parties .............................................................................................12 3. Changes in Business Culture – where are we now? ................................................................... 16 4. Coverage of the Food and Grocery Code of Conduct ................................................................. 19 Retailers ..................................................................................................................................................19 Wholesalers ............................................................................................................................................19 A mandatory or voluntary code .............................................................................................................21 What products should be covered by the Grocery Code? .....................................................................25 5. Enhancing Good Faith .............................................................................................................. 27 Current provision ....................................................................................................................................27 Stakeholder views ..................................................................................................................................27 Problematic behaviours .........................................................................................................................28 Enhancing good faith ..............................................................................................................................29 Enhanced Australian Competition and Consumer Commission guidance .............................................31 Model principles .....................................................................................................................................32 6. Dispute resolution ................................................................................................................... 33 Grocery Code framework .......................................................................................................................33 Internal dispute resolution .....................................................................................................................34 Feedback to the Review .........................................................................................................................36 Addressing a lack of trust and fear of retribution ..................................................................................38 Recommended changes to dispute resolution ......................................................................................42 7. Compliance and Enforcement .................................................................................................. 47 Australian Competition and Consumer Commission compliance checks and reporting requirements 47 A more collaborative approach ..............................................................................................................48 8. Other Areas for Improvement .................................................................................................. 51 iii Appendices Appendix A: Journey to the Grocery Code .................................................................................... 59 Appendix B: International Comparisons ....................................................................................... 61 United Kingdom (UK) ..............................................................................................................................61 European Union (EU) ..............................................................................................................................63 Ireland ....................................................................................................................................................64 Canada ....................................................................................................................................................64 Appendix C: Interactions with the Horticulture Code of Conduct................................................... 65 Different codes deal with different problems in an industry .................................................................65 Is the operation of two codes causing an uneven playing field? ...........................................................65 Are there inconsistencies between the codes? .....................................................................................66 Appendix D: Dispute Resolution in Industry Codes ....................................................................... 67 Appendix E: Code Arbiter Comparison ......................................................................................... 69 iv Foreword Australians are well known for our desire to give people a ‘fair go’ and we expect nothing less when it comes to the way our supermarkets (also known as retailers) do business with their suppliers within the grocery supply chain. We want the companies and family-owned businesses behind the brands and products to be treated fairly by the major retailers and wholesalers that have greater bargaining power. This ensures that suppliers are able to invest and innovate to give consumers the best choice, quality and value at the checkouts. Strong community expectations is the reason why Coles, Woolworths and the Australian Food and Grocery Council came together to create the Food and Grocery Code of Conduct (the Grocery Code). In 2015, the Australian Government prescribed the Grocery Code into law under the Competition and Consumer Act 2010. The Grocery Code sets out the rules by which the retailers and wholesalers should play by when dealing with suppliers – to increase commercial transparency, impose minimum standards of business practice and provide equitable dispute resolution. The Grocery Code is unique in that it is an industry-led initiative and the only voluntary prescribed industry code of its kind. ALDI, Coles, Woolworths and About Life have become signatories and are bound by the Grocery Code, which is enforced by the Australian Competition and Consumer Commission. Now three years on, the Government has appointed me to review the operation
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