The Australian Food and Grocery Council has welcomed the federal government’s announcement of its second review of the Food and Grocery Code. The voluntary code was introduced in 2015, to improve standards of business behaviour in the food and grocery sector, including the conduct of retailers and wholesalers towards suppliers.
Assistant Minister for Competition, Charities and Treasury, Dr Andrew Leigh, released the review’s terms of reference and said the government will appoint a reviewer who will be supported by a secretariat from Treasury.
The Competition and Consumer (Industry Codes – Food and Grocery) Regulation 2015 was introduced to improve transparency and certainty in the commercial dealings between retailers, wholesalers, and suppliers, and provide an effective process for parties to resolve their disputes.
Australian Food and Grocery Council (AFGC) CEO Tanya Barden said, “Since its inception in 2015, the Code has been an essential element of how food and grocery manufacturers conduct their business with supermarket retailers.”
“While the relationship between suppliers and retailers has improved since the Code came into effect, this review comes at a time of increased pressure on margins, strained supply chains and follows years of industry disruption.
“We look forward to engaging with government as they embark on this review and do so with the view of ensuring a competitive and productive environment for the food and grocery manufacturing sector in Australia.”
Professor Graeme Samuel reviewed the code in 2018, which resulted in changes to the dispute resolution procedures. These (Part 5 of the code) won’t be reviewed in this round.
The regulations require that the government initiate two separate reviews of the code, the first review considered the operation of the dispute resolution provisions (Part 5 of the Code) and the second review will consider the operation of the remaining provisions.
The Treasury completed the first review in September 2023, the final report has been delivered to the government for consideration.
Barden said, “Previous reviews have made improvements to the relationship between suppliers and retailers, and industry expects the changes we pursue this time around will reflect the current environment and the new challenges we face.
“In some cases, manufacturers can be entirely reliant on one retailer as a customer. Having the Code to outline how both parties are to engage on things like price and listing of products is incredibly important.”
The AFGC was a founding party in the development of the code.
The terms of the review:
- assess the effectiveness of the Code provisions (other than Part 5 of the Code) in achieving the purpose of the Code to improve the commercial relationship between retailers, wholesalers and suppliers in the grocery sector, and
- consider the need for the Code, including whether it should be remade, amended or repealed.
In evaluating the purpose and features of the Code, the review will have particular regard to:
- the impact of the Code in improving commercial relations between grocery retailers, wholesalers and suppliers,
- whether the Code’s provisions should be extended to other retailers or wholesalers operating in the food and grocery sector,
- whether the Code should be made mandatory, and
- whether the Code should include civil penalty provisions.
