Australia's major supermarket chains are once again in the sights of the Australian Competition and Consumer Commission, this time over the way they delist food and grocery manufacturers' products from shelves.
Speaking at the Australian Food and Grocery Council's annual forum in Canberra, ACCC chairman Rod Sims said supermarkets needed to improve the way they notified suppliers when delisting products to avoid breaching the Food and Grocery Code of Conduct.
Under the code, which came into full effect this year, supermarkets can delist a supplier's product for only genuine commercial reasons and must give reasonable written notice.
Supermarkets must also inform the supplier of their right to have decisions reviewed by a senior buyer.
Mr Sims said the ACCC had raised its concerns with Aldi, Coles and Woolworths after recent compliance checks or audits of retailers who had signed up to the code.
"Some delist notices did not give suppliers reasonable notice; the worst examples were delistings that appear to have occurred on the same day as the notice was served," he said.
"In others, suppliers were faced with the deletion of multiple products but were given less than a month's notice to deal with stock levels that may have been maintained by the supplier on a national basis."
Other delist notices did not include any real reasons for delisting and where reasons were provided, they were typically general in nature and lacked any details specific to the supplier.
In some instances, retailers cited a failure to meet commercial sales or profit targets but failed to provide details.
"This must raise doubt as to whether the decision was made for genuine commercial reasons," Mr Sims said.
The supplier's right to have delisting decisions reviewed was also often overlooked and basic information such as the relevant buyer's name and contact details were consistently missing in delist notices, making it difficult for suppliers to seek a review.
He said the ACCC was looking closely at suppliers' concerns and expected supermarkets to address them quickly.
The delisting notices and other issues raised in an AFGC survey were disappointing because supermarkets were working to make real and positive changes to their dealings with suppliers, Mr Sims said.
"These deficiencies in the standard of conduct by the retailers is disappointing, particularly given the key objective of the code is to improve transparency and certainty. We are looking at these concerns closely and will be looking to the supermarkets to address them quickly."
The Federal Court heard last week that Woolworths' buyers threatened to delist products if suppliers did not make cash payments under Mind the Gap, a scheme implemented in the weeks before Christmas 2014 to plug a $50 million hole in Woolworths' profits.
This behaviour would now be in breach of the code of conduct.
The ACCC took action against Woolworths in December 2015, accusing the retailer of unconscionable conduct, and the case was heard last week.
Woolworths is defending the allegations. In its closing submission last week Woolworths said demanding $60 million from suppliers in the run-up to Christmas 2014 was the "ordinary stuff of commerce" and a business in a capitalist economy should not be punished for being motivated by profit.
