Grocery goliaths bullying suppliers
SUPERMARKET suppliers have been threatened with cuts to their product ranges or shelf space unless they lower prices, but savings have not been passed on to shoppers, a government review has heard.
The review has also heard complaints from suppliers about supermarkets refusing to accept price increases driven by rising costs such as electricity, only to then jack up shelf prices and pocket the extra profit.
Suppliers who have withheld goods in response to a price rise dispute have also been punished by having other lines pulled from shelves and receiving reduced orders.
The complaints are listed in a draft report for a review of the Food and Grocery Code of Conduct by Graeme Samuel, the former head of the competition watchdog.
The code came into effect in 2015 after years of complaints about how supermarkets and wholesalers dealt with suppliers. It is voluntary but legally enforceable for those who opt in.
Mr Samuel’s review, commissioned by the Federal Government in March, has found while relations between Wool- worths, Coles and Aldi and their suppliers have significantly improved, instances of troubling behaviour persist.
“The broad feedback from across the industry is there has been significant improvement in the conduct of retailers over the last three years,” the report notes.
“However, the review received a range of complaints from suppliers alleging that problematic behaviours persist at the buying level.”
Suppliers remained hesitant to raise possible code breaches with supermarkets and did not trust their dispute-resolution processes, Mr Samuel finds.
“Stakeholder feedback stated that many suppliers are reluctant to pursue dispute resolution … due to a fear of retribution and lack of trust in the process.”
Mr Samuel calls for each supermarket chain to establish an independent adjudicator modelled on the Coles arbitration process led by former Victorian premier Jeff Kennett.
He also calls on Metcash to sign onto the code and urged the government to impose a separate code of conduct on the IGA supplier if it continued to refuse.