Woolworths and Aldi Under Fire For Unfair Suppliers Agreements

The new Grocery Code of Conduct was set up and implemented by the Australian Competition and Consumer Commission (ACCC). The code came as result of years of complaints from farmers and food manufacturers about unfair treatment from the supermarket giants. The code is there to ensure that retailers deal and negotiate with their partners in good faith, particularly in regards to their supplier agreements.

The ACCC has reported that there have been complaints regarding the way that some major suppliers, namely Woolworths and Aldi, have set up their new supplier agreements despite the new requirements of the Grocery Code of Conduct. ACCC chairman Rod Sims said that “the code imposes a duty to deal with suppliers in good faith and we are concerned by reports we have received from suppliers that suggest that some retailers have not got off to a good start.” According to the ACCC the complaints are mainly concerned with the impression of the Grocery Supply Agreement (GSA) that the supplier is not able to properly negotiate the terms of the GSA.

Woolworths have responded claiming that the impression was due to a ‘minor wording issue’ and that they are ‘disappointed that the ACCC decided to issue a press release’ despite the fact that they had sent letters to a number of their suppliers offering to amend the agreements to comply with the Grocery Code. Aldi on the other hand told ABC Rural that they will ‘respond in due course to the specific claims that have been brought’ against them. For the ACCC it is imperative that retail giants such as Woolworths and Aldi comply with the code in order to prevent retailers from abusing their significant market power particularly when negotiating with much smaller suppliers.

Despite Woolworths’ ‘disappointment’, they were quick to provide the ACCC with their new supplier agreement that now complies with the code ready to send out to those suppliers who received the ‘minor wording issues.’