Woolworths and Aldi are being investigated for the way they are still treating suppliers despite signing the Food and Grocery Code of Conduct which requires them to be fair.
Coles, Woolworths, Aldi and Sydney retailer About Life have all signed up to the voluntary code which was drawn up after reports the big supermarkets were using their dominant market share to squeeze the margins of suppliers.
Consumer watchdog the ACCC (Australian Competition and Consumer Commission), says it’s concerned at reports the two supermarkets are giving suppliers an agreement which gives the impression the terms cannot be negotiated.
“The aim of the code is to redress the imbalance in bargaining power that can exist between suppliers and large grocery retailers by prohibiting certain types of unfair conduct”,” says ACCC chairman Rod Sims.
“The ACCC has concerns as to the manner in which some retailers, in particular Woolworths and Aldi, are presenting new Grocery Supply Agreements, which might give the impression that the supplier is not able to negotiate the terms.”
The new code sets out a number of prohibitions including demanding a payment for wastage when it occurs at the retailer.
“One of the purposes of the Code is to provide certainty to suppliers, who are often in a much weaker bargaining position when dealing with retailers,” Sims says.
The voluntary code has rules about agreements, payments, termination of agreements and dispute resolution.
Follow Business Insider Australia on Facebook, Twitter, and LinkedIn