Supermarket code needs financial penalties, says watchdog

The independent reviewer has “regrettably” recommended financial penalties for noncompliance following dealings with Coles and its arbiter Jeff Kennett.

Retailers should be fined for breaching the Grocery Code of Conduct, the supermarket watchdog says.

Independent reviewer Chris Leptos made the recommendation after finding Coles and the supermarket’s independent arbiter Jeff Kennett were not “acting in the spirit” of the voluntary agreement.

Mr Leptos’s overall assessment of the seven-year-old code, introduced to address predatory behaviour from retailers and wholesalers, was that it was working well and making a significant contribution to a more respectful relationship between suppliers and code signatories Coles, Woolworths, ALDI and Metcash.

But it contained “several deficiencies” that led him to recommend a number of changes to strengthen the agreement.

Mr Leptos said Coles’ independent arbiter Jeff Kennett declined to give him access to five closed complaint files.

These deficiencies follow difficult dealings this year with Coles, which Mr Leptos said declined to provide him access to five complaint files held by Mr Kennett, despite assuring the former Victorian premier confidential information could be redacted before his review.

“Clause 37A of the code says I have a right to see those files,” Mr Leptos said.

“Imagine having an independent reviewer, who doesn’t have access to complaint files.

“My conclusion, regrettably, is that Coles and its code arbiter are not acting in accordance with the spirit of a voluntary code.

“I believe this highlights the weakness at the core of the current code – specifically that it is a voluntary undertaking with zero compliance penalties.”

The federal Department of Treasury is reviewing the code’s dispute resolution process, looking at whether it provides an effective, fair and equitable mechanism for raising and investigating complaints between retailers and suppliers.

Mr Leptos is urging stakeholders to make a submission to the review canvassing their thoughts on his proposal, including the size of possible penalties.

Coles disagreed with Mr Leptos’ conclusion, with a spokesman pointing out it was based on one disputed supplier issue out of almost 2000 suppliers.

“We are committed to working with our suppliers in a fair and transparent way and complying with the requirements and spirit of the Code,” the spokesman said.

“According to the supplier survey conducted by the independent reviewer, this year’s survey results show most suppliers say they have fair dealings with us and there has been substantial improvement overall across the areas surveyed.”