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The code covers certain conduct

The code regulates how large grocery businesses do business with their suppliers.

This includes:

• that they must deal with suppliers lawfully and in good faith
• that certain things must be included in grocery supply agreements
• how grocery supply agreements may be varied
• when payments may be required from suppliers for certain benefits and activities
• how they must communicate any requirements, standards or quality specifications for grocery products
• protections for suppliers against retribution
• certain additional protections for suppliers who supply fresh produce.

The code also provides for dispute resolution through mediation and arbitration.

Large grocery businesses are automatically covered

The code is mandatory for large grocery businesses.

A retailer or wholesaler is a large grocery business for a financial year when:

• they have a supermarket business or a grocery wholesaling business in Australia, and
• the total revenue earned by that retailer or wholesaler, and each related body corporate of that retailer or wholesaler, from that business exceeded $5 billion for the previous financial year.

Where a retailer or wholesaler starts or stops being a large grocery business, they must notify the ÌÇÐÄÔ­´´ in writing. When to lodge the notification depends on the business’s financial reporting obligations under the Corporations Act 2001. Businesses should seek legal advice about their obligations.

Suppliers don’t need to sign up to be covered

A supplier is a business that supplies groceries for retail sale by another person or business in Australia.

Suppliers to large grocery businesses are automatically protected by the code. Suppliers don’t need to sign up to the code.

Groceries include food and other products

Groceries that are covered by the code include, but are not limited to:

• food
• non-alcoholic drinks
• household products including electrical appliances, kitchenware and cleaning products
• personal care products including toiletries, cosmetics, first aid products and medicine (other than prescription medicine)
• stationery products, magazines and newspapers
• tobacco and tobacco products
• pet food and pet care products
• plants, flowers and gardening equipment.

These groceries aren’t covered by the code:

• food sold for in-store consumption
• non-alcoholic drinks sold for in-store consumption
• alcoholic drinks.

Grocery supply agreements are set out in the code

About grocery supply agreements

The code sets up a framework for grocery supply agreements. A grocery supply agreement is between a supplier and a large grocery business for the supply of groceries.

A grocery supply agreement is not just the principal agreement and documents made under that agreement. It includes all contracts or agreements between a large grocery business and a supplier that relate to the supply of groceries. These other documents may include:

• freight agreements
• promotion agreements
• supplier portal documents
• purchase orders.

A grocery supply agreement must be in writing. Failure to comply with this obligation will make the large grocery business liable to civil penalties.

A grocery supply agreement must set out:

• any delivery requirements
• the circumstances in which the large grocery business can reject groceries
• when suppliers will be paid, and circumstances in which payment may be withheld or delayed
• the duration of the agreement, if the agreement is intended to operate for a limited time
• any quantity and quality rules
• the circumstances in which the agreement may be terminated.

Failure to include provisions about these topics will make the large grocery business liable to civil penalties.

Limits on varying a grocery supply agreement

The code limits the ability of large grocery businesses to vary a grocery supply agreement.

A large grocery business must not vary a grocery supply agreement without the written consent of the supplier, unless several conditions are met. These conditions include that the grocery supply agreement expressly allows them to do so, and the variation is reasonable in the circumstances.

A large grocery business must not vary a grocery supply agreement with retrospective effect under any circumstances.

Failure to comply with these obligations will make the large grocery business liable to civil penalties.

The code is enforced

The ÌÇÐÄÔ­´´ is responsible for enforcing the code. We have the power to investigate and take enforcement action. Breaches of the code by large grocery businesses may result in civil penalties.

The code also requires the government to appoint a . The code supervisor has a range of non-enforcement responsibilities under the code. These include to:

• produce annual reports on disputes
• conduct confidential supplier surveys
• identify systemic issues with the code
• review the dispute resolution processes of the large grocery businesses.

Interactions with other industry codes

The food and grocery code does not apply when it conflicts with the:

• dairy code
• franchising code, or
• horticulture code.

The dairy code will apply to a large grocery business’s relationship with dairy farmers, where the large grocery business buys milk directly from those farmers. This is in its capacity as a ‘processor’ under the dairy code. Otherwise, a large grocery business’s relationships with its suppliers, such as other farmers and other dairy processors, will be covered by the food and grocery code.

Notifying the ÌÇÐÄÔ­´´ under the code

The code contains a range of obligations on large grocery businesses to notify the ÌÇÐÄÔ­´´ of certain matters. Where an obligation applies, large grocery businesses should give us written notice by email or post.

Email: foodandgrocerycode@accc.gov.au

Post to:
David Salisbury
General Manager Small Business and Agriculture
GPO Box 3131, Canberra ACT 2601

See also

Resolving disputes under the food and grocery code

Enforcement of the food and grocery code