Woolworths and Aldi under fire from ACCC

ACCC investigates reports of Woolworths and Aldi breaching Food and Grocery Code.

Unfair treatment alleged

Supermarket giants Woolworths and Aldi may not be playing by the rules when it comes to negotiating trade agreements with suppliers.

 The ACCC regulates the Food and Grocery Code of Conduct – the manner in which grocery retailers deal with their suppliers. ACCC chairman Rod Sims said the aim of the Code is to compensate for the imbalance in bargaining power that sometimes exists between suppliers and large grocery retailers by prohibiting certain types of unfair conduct.

"One of the purposes of the Code is to provide certainty to suppliers who are often in a much weaker bargaining position when dealing with retailers," said Sims. "In order to provide that certainty, the ACCC expects retailers to set out the circumstances in which they will seek payments from suppliers."

The key protections in the Code include that:

  • Retailers will write grocery supply agreements (GSAs) and then terms can be negotiated by both parties
  • All parties will act lawfully and in good faith
  • Retailers are prohibited from threatening suppliers without reasonable grounds
  • Minimum standards of conduct must be established
  • Retailers and wholesalers must provide annual employee training on the requirements of the Code.

Mr Sims said both supermarket chains are presenting new GSAs that may give the impression that the supplier is not able to negotiate the terms. The agreement is voluntary between the supplier and retailer, and must set out:

  • delivery requirements
  • the circumstances in which the retailer or wholesaler can reject the groceries
  • the payment period and circumstances in which payment must be withheld or delayed
  • the term of the agreement
  • any quantity or quality requirements
  • the circumstances (if any) in which the agreement may be terminated.

Greens Senator Nick McKim commented on the inadequacy of the voluntary code, saying the government needs to step in and make the code mandatory.

"Unfortunately for their suppliers, the big supermarkets are continuing to abuse their dominant market position," he said.