A consultation covering how disputes between Australian supermarkets and suppliers are resolved will close on February 1.
The government is reviewing the Grocery Code of Conduct because the system is generating such a low number of complaints from suppliers.
A consultation report suggests red tape, fears of retribution and concerns about damaging a commercial relationship could be behind the low numbers.
Under the provisions of the code, disputes between suppliers and the big four grocery retailers – Coles, Woolworths, Aldi and Metcash – can be resolved by independent code arbiters assigned to each supermarket. Signatories to the code agree to be bound by their resolutions.
However, the government said since the system has been in place a surprisingly low number of complaints have been referred to code arbiters by suppliers. And of those few cases, nearly all were resolved in favour of the retailers.
Not a single supplier received any redress through the arbitration process.
In 2020-21 Coles’ code arbiter received three complaints. In all cases Coles was found to have acted reasonably. In 2021-22 Coles received two complaints. Again, both were resolved without redress to the supplier. No other complaints were received by any other retailer in that period.
The consultation paper said there were several possible explanations for the low number of complaints.
It suggested these might include “good behaviour” by retailers or that suppliers were unaware of potential channels for disputes. But the report recognised other factors may be preventing suppliers from speaking up.
These included too much paperwork, fear of damaging the commercial relationship and fear of retribution.
In December 2022 Chris Leptos, food and grocery code independent reviewer, criticised Coles’ code arbiter, former Victorian premier Jeff Kennett, for “flawed” decision-making and failing to comply with directions.
Leptos said Kennett’s behaviour demonstrated that the reviewer should be granted new powers, including fines for retailers for non-compliance and the ability to force access to files.
This came after he accused Kennett, who is paid by Coles despite his independent status, of ignoring his recommendations and failing to provide him with supplier files he requested.
Kennett has strenuously refuted the accusations and Coles says the supplier files contain confidential information.
Meanwhile, New Zealand has been working to address concerns over the power of the two major grocery retailers within the country’s food supply chain.
The government plans to allow the grocery commissioner to take action and issue substantial fines where necessary to create extra competition.
The two largest operators – Countdown and Foodstuffs – could be forced to negotiate with competitors to buy groceries on a wholesale basis at set prices.
If negotiations are unsuccessful they may be forced to agree to prices recommended by the government or face additional regulation.
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