Aldi, Woolies sign grocery code: Why Bruce Billson is calling on Metcash to do the same

The Food and Grocery Code of Conduct is set to come into effect today, barring any last minute move in the Senate to block the legislation in today’s sitting.

Speaking to SmartCompany this morning, Small Business Minister Bruce Billson, who has been a vocal advocate for the code, said the new measures are a “very substantial step forward” to protect grocery suppliers.

The new code will protect suppliers from supermarkets varying contracts mid-term, commit supermarkets to engage in good-faith dealings with suppliers and establish effective dispute resolution boundaries.

The onus will be placed on supermarkets to show the reasonableness of any changes in their dealings with suppliers and provide relevant documents to prove that stance to the Australian Competition and Consumer Commission.

Billson says the grocery industry has been broadly supportive of the involuntary measures, with Aldi formally implementing the code this week. Woolworths was the first major supermarket to sign on earlier this month.

“It’s been extraordinarily positive,” Billson says.

The original code was penned by Coles, with Woolworths coming on board shortly after, and was then amended by the government in the draft consultation process.

“[Industry] brought forward the draft, we saw that it needed strengthening, so we consulted with them and have landed on what I think is a very effective and substantially positive step forward for the protection for suppliers,” says Billson.

“I’m confident Coles will sign on [also], given they have been very conscious and helpful in their engagement in strengthening and adding teeth to the code. I have no sense that they’ll deviate from that position.”

But Billson has called on Metcash to also sign on to the code, saying he finds their current stance of supporting the code but not formally signing on “curious”.

“It is disappointing and unclear why they won’t sign on to a code they are planning to comply with anyway,” he says.

“In the interest of surefootedness, clarity and transparency, I urge Metcash to reconsider its position and follow the leadership of their rivals in the important grocery space.”

But SmartCompany understands Metcash is supportive of the code and is testing it on a trial basis, with the view to implement it in the next 18 months.

As Metcash works with a decentralised model, rolling out the code may not be as simple as it would be for the integrated chain supermarkets. SmartCompany also understands Metcash has concerns over the costs of implementing the code.

The company revealed a $384.2 million full-year loss yesterday, including massive write-downs on its core food and grocery division.

In a statement provided to SmartCompany, Aldi said its existing suppliers will transition to the new terms from August 3 and new suppliers will agree to the new terms from June 15, 2015.

“We have always supported the concept of a strong and sustainable Australian grocery industry for retailers and suppliers,” Aldi said.