Interim Report on Food and Grocery Code of Conduct published 

8 April 2024

The review of the Code of Conduct led by Dr Craig Emerson has released its interim report today, which reflects many of the AFGC’s recommendations to strengthen the Code and the disputes process.  

The review, which was the second since the Code was set up in 2015, was undertaken to improve certain elements of it. The main question before the reviewers was whether the Code should move from voluntary to mandatory or scrapped completely. 

Key Takeaways  

• Mandatory from Voluntary: Emerson has recommended that the Code be made mandatory for wholesalers and retailers with annual revenue of more than $5 billion 
• New Penalties: The introduction of penalties for breaches of up to $10 million, 10% of a supermarkets market share or three times the benefit gained from the contravening conduct 
• Dispute resolution: Although the Code is recommended as mandatory, the review has proposed low-cost mediation and arbitration alternatives to court proceedings.
  • Retailers can appoint Code Mediators (previously Code Arbiters) who can hear formal and informal complaints 
  • New powers for a Code Supervisor (previously Independent Reviewer) to:
    • hear complaints directly and raise systemic issues with retailers, Code mediators or ACCC  
    • review a Code Mediator’s dispute processes if requested by supplier 
    • arrange independent mediation (mandatory) or arbitration (subject to agreement by retailer and supplier) 
    • provide Code advice to suppliers 
  • Retailers are encouraged to agree to an independent, binding arbitration process with up to $5mn reparations in grocery supply agreements (the arbitration process needs to be consensual between parties – can’t be required in a mandatory code for legal reasons) 
  • This recommendation is open to consultation. 
• Addressing the fear of retribution: adding protection against retribution in the purpose of the Code and prohibiting any conduct that constitutes retribution against a supplier; requiring senior retailer managers to monitor commercial decisions of suppliers that have lodged a complaint   
• Incentivising better buyer behaviour: retailers should ensure incentives and payments to buyers and category managers are consistent with the purpose of the Code (to improve trust, transparency and certainty) 
• Direct line to ACCC: To address fear of retribution, there is a recommendation for a new channel for suppliers to make confidential complaints directly to the ACCC 
• Opt outs to be tightened: the Review recommends that the Code contain minimum standards that cannot be contracted out of. The review is seeking further information on appropriate minimum standards and if there is justification for exceptions.  
• Extension of good faith to suppliers: this issue is being considered, noting it is in place in other industry codes.  

Full list of recommendations 

The interim report makes eight “firm” recommendations (including mandatory, penalties, retribution, incentive payments, confidential line to ACCC) which will not change and three “draft” recommendations (disputes resolution, opt outs and ACCC infringement notices) which are subject to change based on stakeholder feedback. In addition, there are 15 questions to help the reviewers refine the final report.  For the full report please click here.  

Next steps

The AFGC will be providing feedback on the interim report by 30 April 2024 with a final report due to the government by 30 June. It will then be a matter for government to decide what and when they adopt recommendations from the review. Indications thus far are that the government is aligned with the review’s positions.  

Contact  

For more information, please get in touch with Rick Umback – Manager, Retail and Industry Policy, at rick.umback@afgc.org.au.

TANYA BARDEN
CHIEF EXECUTIVE OFFICER