Tensions within the Coalition government over the new Food and Grocery Code of Conduct regulations will be ventilated in Canberra this Friday.

The code of conduct was developed between government and industry groups over a four-year period and tabled in federal parliament on March 2.

The regulations aim to curtail market power abuse in the retail supply chain, but disagreement between the Liberal and National Parties over its status as a voluntary or a mandatory code has continued.

Small Business Minister Bruce Billson said once respondents agree to be bound by the code it then becomes enforceable.

“Compliance with it is mandatory, once you choose to opt into the framework,” he said at its launch.

“The major supermarkets have said they’ll opt in and I’m encouraging others in the retail supermarket industry and in the supermarket supply chain to also participate.”

Canavan calls for inquiry

Queensland National Party Senator Matt Canavan doubts the code’s strength and has pushed for a brief Senate inquiry to examine its powers.

The Senate Economics Legislation Committee inquiry is due to report at the end of this month and will hold a public hearing in Canberra on Friday this week.

Senator Matt Canavan told Fairfax Media the inquiry would examine whether the proposed voluntary code would be effective in its implementation.

“There are many who are concerned that a voluntary code will just be a paper tiger,” he said.

“I think we need a real response to the proven cases of abuse of market power in the grocery industry.

“A Senate inquiry will bring these issues to the fore.

“Like all inquiries it is open to all and I would hope that regulators, supermarkets, food manufacturers and farmers put their views forward.”

Wrong code worse than none: Canavan

Senator Canavan said a successful code should provide greater discipline among participants to ensure good faith negotiations; have a fair and rigorous method for resolving disputes, and minimise the ability to “get out” of its requirements.

“A code that makes no difference is worse than no code because it would reduce the political pressure to take real action on competition laws generally after the Harper Review,” he said.

“It is really important that we get this right.”

But Minister Billson is understood to be fuming at the ongoing push from the Nationals to further examine the regulations, despite an already lengthy and extensive consultation period.

He believes scope exists to make the code of conduct compulsory in future if voluntary compliance is not forthcoming from the supermarkets.

Committee chair and South Australian Liberal Senator Sean Edwards was circumspect saying he was looking forward to the inquiry being heard at Friday’s public hearing, followed by a report on the new code.

“I understand there’s a robust discussion going on around whether it should be a voluntary code or a mandatory code, but I look forward to getting the evidence supporting both cases,” he said.

Senator Canavan has also called for the Competition and Consumer Act to be amended so large companies like Coles or Woolworths can be divested if found to be abusing their immense market power.

“Divestiture powers should be rarely used but they are the ultimate deterrent against companies with market power doing the wrong thing,” he said.

“Those with market power have a privileged position in the market place and they should be held to higher responsibilities because of that position.”

A need to ‘get on with this’: Billson

This week, Mr Billson said the code was also subject to a disallowance period, where “the worst outcome could see Labor stand in the road of the introduction of this important step forward”.

He said a lot of discussion and a great deal of concern had also been expressed in the community and in parliament about the conduct of big retailers and wholesalers towards small suppliers in the food and grocery space.

But he said the ALP had talked about the issue and looked into it since 2008 but delivered “absolutely nothing”.

“What we have seen is a need to get on with this work,” he said.

“We have done that and we have delivered the Food and Grocery Code.

“The ACCC (Australian Competition and Consumer Commission) chairman Rod Sims said, quite rightly: ‘The new code makes it clear that no matter how much bargaining power a retailer holds, they must deal fairly with the suppliers’.

“That is what the code seeks to deliver, not just because that is good for the small businesses that are suppliers to the retailers, but because it looks after the consumers as well.

“If certain behaviour was to continue, and without the code to keep that conduct on track, the consumers would be disadvantaged.”

NFF still lukewarm

The National Farmers’ Federation (NFF) pulled out of the code development process prior to the 2013 federal election after rejecting the voluntary option and calling for it to be mandatory.

The code complies with powers within the Competition and Consumer Act 2010, but after its release NFF chief executive Simon Talbot gave a lukewarm response saying the regulations still required a commitment from all major retailers.

The deadline for submissions to the inquiry closed on Friday, with only five received on public display, and nothing from the NFF.

Mr Talbot said issues with the code included the need for an independent and transparent complaints and mediation process, remedies for breaches of the code and a requirement to act in good faith.

“The proof of this pudding will be in the eating,” he said when the code was released.

Extracted in full from the North Queensland Register.