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Government forces Coles and Woolworths to treat small business with contract fairness

Sunday, March 15, 2015

This month the Federal Small Business Minister, Bruce Billson, released the Food and Grocery Code of Conduct.  This is a big step forward for Australian small- and medium-sized businesses supplying to the supermarket sector.

The Code will force the supermarkets, particularly Coles and Woolworths, to have proper contracts with suppliers to which the supermarkets must adhere. The Australian Consumer and Competition Commission will monitor the Code.

The Code is about fairness and the application of proper contract principles. It comes after disclosure of widespread exploitation of suppliers by the big supermarkets as part of their ‘normal’ business practice. Late last year the ACCC fined Coles $10 million for ‘screwing over’ small business people.

We have watched Minister Billson on this issue for some time. Fixing this supermarket unfairness problem has been a passion of his. See this YouTube video of Bruce explaining his approach to small business fairness.

In our view, the supermarket ‘fairness’ code would not have happened without Bruce Billson’s patient but persistent determination.
 
The Code:
  • requires retailers and wholesalers to act in good faith;
  • sets out the requirements of agreements between retailers or wholesalers and suppliers, including that they be in writing;
  • limits when retailers or wholesalers can unilaterally or retrospectively vary an agreement with a supplier, and requires any variation and the reason for it to be in writing; and
  • sets out a dispute-resolution process.
This ‘supermarket fairness code’ operates on exactly the same principles as the fair contract laws for small business people that Abbott and Billson promised. Bruce Billson has said that these laws will go ahead in 2015.

Here are the principles of fair contract laws that ICA has been advocating since 2010.

 

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