A retailer or wholesaler must negotiate in good faith and take all reasonable steps to resolve negotiations without delay. The negotiation period starts when the supplier notifies a retailer or wholesaler of the price increase. It is expected that price increase negotiations are settled within 30 days of notification. However, complex negotiations may take longer to resolve.
The retailer or wholesaler should actively engage in negotiations with the supplier throughout the negotiation period. They should not continually limit or delay discussions until the negotiation period has almost finished.
A retailer or wholesaler cannot demand that the supplier disclose commercially sensitive information about the price increase or the related negotiations.
A supplier should let a retailer or wholesaler know about a price increase in writing. Once a supplier notifies a price increase in writing, the retailer or wholesaler needs to tell the supplier within 30 days whether they:
If the retailer or wholesaler doesn’t accept the price increase proposed by the supplier, the supplier can request to enter into negotiations.
The ACCC considers that a retailer or wholesaler is informed of a price increase when a supplier’s written notice of the price increase is delivered to them.
Retailers and wholesalers must report annually on how they’ve responded to price increase notices from suppliers.
Delisting is when a retailer or wholesaler:
A retailer or wholesaler may only delist a supplier’s grocery product in line with the terms of the grocery supply agreement and for genuine commercial reasons.
Genuine commercial reasons might include where the supplier:
Delisting as a punishment for a complaint, concern or dispute raised by a supplier is not a genuine commercial reason.
Except in limited circumstances, retailers or wholesalers must give reasonable written notice to the supplier before they delist a product. This notice must:
A supplier may ask for information when their products are delisted.
When the supplier makes a written request for information about the delisting or details about the reasons for a delisting, the retailer or wholesaler must promptly respond to the request in writing.
A supplier can ask a retailer or wholesaler to review their decision to delist a product.
If they make this request in writing, the retailer or wholesaler must promptly review their decision and give the supplier a written notice of the outcome of their review. In their notice, they must also tell the supplier the basis for their decision.
If a supplier’s product is delisted or the listing is reduced following a range review, the retailer or wholesaler must give the supplier a reasonable opportunity to discuss the outcome of the review, including the basis for their delisting decision.
A retailer or wholesaler must not threaten a supplier with business disruption, or with the termination of a grocery supply agreement, without reasonable grounds.
During the term of a supplier’s 3-year agreement with a retailer, the retailer requests payments for wastage from the supplier. However, payments for wastage are not provided for in the grocery supply agreement. The supplier refuses to pay and because of this, the retailer threatens to terminate the agreement.
This is a breach of the food and grocery code, as the retailer cannot threaten to terminate the agreement without reasonable grounds.
Under the food and grocery code, a retailer or wholesaler must pay a supplier for the grocery products delivered and accepted under the grocery supply agreement in the timeframe set out in the agreement.
Suppliers must always be paid within a reasonable time after they provide an invoice for the products.
Generally, a retailer or wholesaler can only set off an amount against the supplier’s invoice if:
A grocery retailer or wholesaler can’t ask a supplier to pay for shrinkage.
Shrinkage is loss of grocery products occurring after a retailer has taken possession of the goods, such as due to theft.
The code also places limits on some payments that a retailer or wholesaler might ask the supplier to make:
The supplier can’t be required by a retailer or wholesaler to make any payment to cover any wastage of groceries incurred at:
However, the supplier can agree to make payments for wastage in the grocery supply agreement if:
When requesting payments for wastage, the retailer must remember to consider their obligation to act in good faith.
A supplier enters into a grocery supply agreement that clearly sets out the circumstances in which the supplier must pay for wastage that happens at the premises of a retailer, and the basis of the payment.
Wastage occurs at the retailer’s premises, and the retailer incurs costs of $500 as a result. The retailer seeks compensation of $1,500 from the supplier under the agreement.
The retailer has breached the code. The payment is not reasonable in view of the retailer’s wastage costs.
A supplier might want to renegotiate terms in their grocery supply agreement relating to wastage. For example, a supplier might want to negotiate a lower charge because they have reduced their actual wastage. The code prohibits retailers or wholesalers from using this as an opportunity to negotiate other, unrelated terms and conditions of the grocery supply agreement.
A retailer or wholesaler can’t require a supplier to fund part or all the costs of a promotion unless:
If a supplier agrees to fund a promotion, the retailer or wholesaler may hold the promotion only after giving the supplier reasonable notice in writing.
Retailers or wholesalers who order grocery products from a supplier in connection with a funded promotion:
If the supplier supplies fresh produce, then the retailer or wholesaler must give the supplier any standards or quality specifications in writing and in terms that are clear, unambiguous and concise.
Fresh produce means fresh fruit or vegetables, including fruit and vegetables that have been pre-packaged, but excluding tinned fruit and vegetables.
Retailers or wholesalers must accept all fresh produce delivered that meets the standards or specifications notified to the supplier.
They may only reject fresh produce from the supplier if:
If the retailer or wholesaler rejects the fresh produce because it does not meet the relevant standards or quality specifications, they must provide the supplier with their written reasons within 48 hours.
The retailer or wholesaler must make any claim for damaged grocery products or shortfalls, or any similar claims, within a reasonable time and no later than 30 days after the groceries are delivered.
A supplier delivers oranges to a retailer at 9:00 am on a Monday. The oranges fail to meet a relevant standard. The retailer rejects the oranges on Thursday. This is a breach of the code because the retailer did not reject the produce within 24 hours of delivery and did not provide the supplier with written reasons for rejecting the oranges within 48 hours.
Principles for product ranging and allocating shelf space must be published or given to suppliers by retailers and wholesalers.
Retailers and wholesalers must act according to their product ranging and shelf space allocation principles.
They must also not discriminate when applying these principles, including by not favouring their own brand products.
Before starting a range review the retailer or wholesaler must give suppliers who may be affected written notice clearly stating:
The notice must be provided to suppliers within a reasonable time.
The retailer or wholesaler must give any supplier affected by the outcome of a range review a reasonable opportunity to discuss the outcome of the review, including the basis for their delisting decision.
A retailer or wholesaler must communicate any labelling, packaging or preparation rules in writing and in terms that are clear, unambiguous and concise.
They generally must also give suppliers reasonable written notice of any changes to these rules.
A retailer or wholesaler cannot directly or indirectly require a supplier to materially change their supply chain procedures during the period of the grocery supply agreement unless they:
A supplier’s intellectual property rights in relation to grocery products, including in branding, packaging and advertising, must be respected by the retailer or wholesaler. This includes not:
If a supplier discloses confidential information to a retailer or wholesaler in connection with the supply of grocery products, including information in relation to product development, proposed promotions or pricing, the retailer or wholesaler:
The retailer or wholesaler must establish and monitor systems to ensure that they meet their confidentiality obligations.
Suppliers and other small businesses have extra protections under competition and consumer law.
It is illegal for a business to behave in a way that misleads or deceives, or is likely to mislead or deceive, consumers or other businesses. This applies even if:
Find out more about false or misleading claims and what a business can and can’t do.
The Australian Consumer Law protects small businesses from unfair terms in standard form contracts.
The ACCC doesn’t decide if a term is unfair. Only a court or tribunal can decide.
Find out more about unfair contract terms.
Businesses must not engage in unconscionable conduct when dealing with other businesses or their customers, under the Australian Consumer Law. This means retailers or wholesalers must also not engage in unconscionable conduct towards their suppliers.
Find out more about unfair business practices and what a business can and can’t do.
The ACCC took action against Coles Supermarkets Australia Pty Ltd for making threats of commercial consequences to certain suppliers to get them to agree to a rebate program. The Court found that the misconduct of Coles was serious, deliberate, repeated and not done in good conscience.
Certain business practices that limit or prevent competition are against the law. The following are examples of these practices.
Broadly speaking, exclusive dealing occurs when one person trading with another imposes some restrictions on the other’s freedom to choose with whom, in what, or where they deal. Exclusive dealing is against the law only when it substantially lessens competition.
Competition and consumer law bans contracts, arrangements, understandings or concerted practices that have the purpose, effect or likely effect of substantially lessening competition in a market, even if that behaviour does not meet the stricter definitions of other anti-competitive conduct such as cartels.
See Competition and anti-competitive behaviour for more information about what businesses can and can’t do.
A business with a large degree of power in a market is not allowed to engage in behaviour that has the purpose, effect or likely effect of substantially lessening competition in a market. It is not illegal to have, or to seek to get, market power by offering the best products and services.