Coles has breached the supermarket industry’s code of conduct, a scathing report by the food and grocery watchdog has found.
The report raises questions about whether the supermarket giants should be policing themselves, and a call for codes to be backed up with fines.
Former Victorian premier Jeff Kennett, who is the arbiter appointed by Coles to deal with complaints from its suppliers, is singled out by the watchdog as an example of why self-regulation does not work.
Chris Leptos was appointed the independent reviewer under the Food and Grocery Code.
“My dealings this year with the Coles Group, and [Mr Kennett] have caused me to conclude that some important changes are required,” Mr Leptos said.
Zero penalties
Two specific interactions with Mr Kennett this year had convinced him of the futility of industry regulation when it ultimately amounts to a “voluntary undertaking with zero compliance penalties”, Mr Leptos said.
Last month Mr Kennett was accused of denying the independent reviewer access to files that showed how he had been handling disputes.
“Earlier this year I requested Coles to provide me access to the five closed complaint files held by [Mr Kennett],” Mr Leptos said.
“Both Coles and [Mr Kennett] declined access to those files on the grounds of supplier confidentiality, even though I agreed to have the confidential information redacted before my review.”
The New Daily tried to contact Mr Kennett via phone on Thursday and emailed questions but both attempts to seek his comment in response were unsuccessful.
Mr Leptos said he was satisfied that Mr Kennett’s decision was flawed, and said he had written to the Australian Competition and Consumer Commission (ACCC) and recommended that it “take certain actions”.
Earlier this year, when investigating a complaint made against Coles he provided formal recommendations for how the supermarket could improve its processes, Mr Leptos said.
“My recommendations were forcefully rejected [by Mr Kennett],” he said.
“My conclusion, regrettably, is that Coles and [Mr Kennett] are not acting in accordance with the spirit of a voluntary code.”
The review recommends that the industry watchdog be empowered to instigate investigations by the ACCC and to introduce fines for breaking the rules.
Self-policing
Only three complaints were made against the industry (all against Coles) by suppliers during the period under review.
But a survey of industry participants by Mr Leptos’ review team suggested that suppliers might not have been entirely forthcoming if they did encounter problems.
More than 35 per cent of respondents to Woolworths and Coles identified fear of damaging a commercial relationship as a key impediment, which dropped to 23 per cent for Metcash, and 22 per cent for Aldi.
The Food and Grocery Code covers the supermarkets’ treatment of suppliers, including issues such as pricing and the removal of product lines from shelves.
It was the Coalition government’s response to claims of widespread bullying of suppliers, including those who alleged to the ACCC that the supermarket giants were auctioning off spots on the best shelves. Mr Kennett, the nation’s first such arbiter, was appointed in 2014.
Some suppliers alleged that negotiations included threats of “cliffing”, or presenting suppliers with unfavourable terms and warning they could be pushed off shelves if they did not agree.
“We disagree with the report’s conclusion about Coles, noting it is based on one disputed supplier issue out of 1925 suppliers,” a spokesman for the supermarket said.
“We are committed to working with our suppliers in a fair and transparent way and complying with the requirements and spirit of the code.”
The spokesman noted the watchdog’s survey found 65 per cent of Coles suppliers said they had no issues with the supermarket and found improvements in other measures across the year.
