There
are 21 days left to have your say on this discussion paper.
Submissions close 30 April 2024.
Go
to https://treasury.gov.au/consultation/c2024-510813
for details.
Submissions
to the Interim Report will assist Dr Emerson in preparing a Final
Report, which will be provided to the Government by 30 June 2024
IndependentReview of the Food and Grocery Code of Conduct – Interim Report,
5 April 2024, excerpts:
PAGE
1
A
heavy imbalance in market power between suppliers and supermarkets in
Australia’s heavily concentrated supermarket industry necessitates
an enforceable code of conduct. An effective code of conduct would
benefit smaller suppliers and consumers by enabling suppliers to
innovate and invest in modern equipment to provide
better products at lower cost.
The
existing Food and Grocery Code of Conduct (the Code) is not
effective. It contains no penalties for breaches and supermarkets can
opt out of important provisions by overriding them in their grocery supply
agreements.......
PAGES
2-3
The
Review has held more than 40 meetings, as well as receiving 56
submissions in response to the Consultation
Paper that was released on 5 February 2024. In addition, 2
roundtables were co-convened by the Review with the Minister for
Agriculture, Fisheries and Forestry, Senator the Hon Murray Watt,
involving members of the National Famers’ Federation, various
primary producer representative groups, meat and other agricultural
processors, and the trade union movement.
The
terms of reference for the Review ask whether the Food and Grocery
Code (the Code) should be retained as a voluntary code, made
mandatory or scrapped altogether. The Review has found that the heavy
imbalance in market power between the major supermarkets and their
smaller suppliers necessitates the continuation of a Food and Grocery
Code of Conduct in some form. The Code should not be scrapped.
A
mandatory Code that is the best of both worlds
The
Review’s central, firm recommendation is that the voluntary Code be
made mandatory and subject to enforcement by the ACCC. The mandatory
Code should apply to all large supermarkets that meet an annual
revenue threshold of $5 billion (indexed for inflation). Revenue
would be in respect of carrying on business as a grocery ‘retailer’
or ‘wholesaler’ (as defined in the voluntary Code). At this stage
this would capture Coles, Woolworths, ALDI and Metcash. All suppliers
to these businesses
would be covered by the Code.....
PAGE
7
Firm
recommendations
Firm
recommendations of the Interim Report are as follows and will not
change. [my yellow highlighting]
• Recommendation
1: The Food and Grocery Code of Conduct should be made mandatory.
• Recommendation
2: All supermarkets that meet an annual revenue threshold of $5
billion (indexed for inflation) should be subject to the mandatory
Code. Revenue should be in respect of carrying on business as a
‘retailer’ or ‘wholesaler’ (as defined in the voluntary Code). All suppliers should be automatically covered.
• Recommendation
3: The Code should place greater emphasis on addressing the fear of
retribution. This can be achieved by including protection against
retribution in the purpose of the Code and by prohibiting any conduct
that constitutes retribution against a supplier.
• Recommendation
4: As part of their obligation to act in good faith, supermarkets
covered by the mandatory Code should ensure that any incentive
schemes and payments that apply to their buying teams and category
managers are consistent with the purpose of the Code.
• Recommendation
5: To guard against any possible retribution, supermarkets covered by
the mandatory Code should have systems in place for senior managers
to monitor the commercial decisions made by their buying teams and
category managers in respect of a supplier who has pursued a
complaint through mediation or arbitration.
• Recommendation
6: A complaints mechanism should be established to enable suppliers
and any other market participants to raise issues directly and
confidentially with the ACCC.
• Recommendation
8: A Code Supervisor (previously the Code Reviewer) should produce
annual reports on disputes and on the results of the confidential
supplier surveys.
• Recommendation
10: Penalties for non-compliance should apply, with penalties for
more harmful breaches of the Code being the greatest of $10 million,
10 per cent of turnover, or 3 times the benefit gained from the contravening conduct. Penalties for more minor breaches
would be 600 penalty units ($187,800 at present)....
PAGES
70-71
Facilitating
stronger competition in grocery retailing
Greater
competition in grocery retailing and wholesaling would not only
improve the negotiating position
of smaller suppliers, but it would also deliver better prices to
consumers. From the perspective of consumers and the economy at
large, competition is good, but more competition is even better.
To
address wider recommendations is very important for [the] wider
advance in policy reform since
the current Government is appropriately establishing many reviews and
inquiries in many
individual areas. But it lacks a proper mechanism devoted to adding
up and integrating the
results. [Professor
Withers and Professor McEwin (Australian National University),
Submission to the Consultation Paper, 23 February 2024, p1]
A
reformed Food and Grocery Code is one of several cost-of-living and
pro-competition inquiries and measures
being undertaken at present. Other inquiries and initiatives are
outlined briefly below.
ACCC
Supermarket Inquiry 2024-25
On
1 February 2024, the Treasurer, the Hon Dr Jim Chalmers MP, directed
the ACCC to undertake a 12-month
price inquiry into the supermarket sector to ensure Australians are
paying a fair price for their
everyday groceries.
The
inquiry will examine the competitiveness of retail prices for
everyday groceries. Matters to be considered
by the inquiry include, but are not limited to:
• The
structure of the supermarket industry at the supply, wholesale and
retail levels;
• Competition
in the industry and how it has changed since 2008, including the
growth of online
shopping;
• The
competitiveness of small and independent retailers, including in
regional and remote
areas;
• The
pricing practices of supermarkets;
• Factors
influencing prices along the supply chain, including the difference
between farmgate
and
supermarket prices;
• Any
impediments to competitive pricing along the supply chain; and
• Other
factors impacting competition, including loyalty programs and
third-party discounts.
An
issues paper has been published seeking views on the key issues the
ACCC will consider in the inquiry.
An Interim Report will be provided to the Government by 31 August
2024, with the Final Report
due to be provided by 28 February 2025.....
The
full 83 page interim report can be read and downloaded at:
https://treasury.gov.au/sites/default/files/2024-04/c2024-510813-ir.pdf
