AUSTRALIAN Competition and Consumer Commission chairman Rod Sims says the initial implementation of the grocery industry code of conduct has been "disappointing" but has ruled out going back to the drawing board and pushing for a mandatory code.
Mr Sims said the commission was vetting the large retailers' grocery supply agreements to make sure they were compliant with the voluntary code of conduct, after initial feedback from suppliers that Woolworths and Aldi were not negotiating in good faith.
"We were disappointed but it doesn't mean we don't think it can't work and it's totally off the rails," Mr Sims told Fairfax Media before addressing suppliers and retailers at the Australian Food and Grocery Council's industry leaders forum in Canberra on Wednesday.
"We are now working quietly with supermarkets to make sure that's all as it should be."
Mr Sims applauded the Australian Food and Grocery Council for taking the code seriously and hosting training sessions for more than 1000 people representing more than 80 suppliers.
"Given this, it is unfortunate that the major retailers haven't got off to a great start in implementing the code," he said.
In September, the ACCC raised concerns about Woolworths' and Aldi's initial negotiations with suppliers, saying the retailers had given suppliers the impression the terms of new grocery supply agreements were not negotiable.
The ACCC also criticised the lack of detail in new supply agreements, particularly over payments for wastage and theft in stores.
Woolworths hit back, accusing the ACCC of grandstanding and going public only hours after contacting the retailer over its concerns.
But Mr Sims defended the ACCC's move, saying it had been urged to go public by suppliers and needed to act quickly to ensure suppliers were aware of their rights.
"There's no point in having a code if it's not enforced and it's not working as intended," he said. "We'd all be surprised if there weren't a few hiccups. We just want the code to be successful and to be implemented as intended and they deal with each other in good faith and there are no hidden or extra demands for payments."
He ruled out pushing the government for a mandatory code.
"If one supermarket chain wanted out that would be argument for a mandatory code but ... it's not clear to me the code we have now would be any different if it was mandatory.
"I don't think it's a matter of going back, it's a matter of making what we have work."
Supplier representatives say the large retailers continue to seek improved trading terms while staying within the boundaries of the code.
"They won't stop trying to screw down on price," one representative said.
"But at the same time some of the practices of the past don't seem to be there." Mr Sims said the ACCC would now "shine a light" on uncompetitive practices in the agricultural sector, armed with an extra $11.4 million in government funding to establish an agricultural enforcement and engagement unit.
The ACCC already had powers under the Competition and Consumer Act to investigate anti-competitive activities, he said.
It would use the additional funding to understand better the competitiveness of agricultural supply chains, help the sector deal with market concentration and fair trading issues, and increase awareness about codes of conduct and collective bargaining.
The government plans to appoint a new commissioner to the ACCC with responsibility for agriculture issues. The commission has also established a dedicated agriculture unit and will call soon for expressions of interest from individuals and organisations for a consultative committee.
