Tense negotiations between Arnott’s and Coles continue to dominate news headlines. Following Arnotts’ announcement of a 10% price increase, Coles removed several of Arnott’s products from its shelves, stocking only the “essential” lines.

Upsettingly, this means LegalVision employees will be forced to stomach Original Tim Tams, rather than Zumbo’s Salted Caramel for our afternoon teas. Although, Originals do make for better straws. In our competition law update, we step you the serious business of negotiating which Tim Tams to stock.

Coles’ actions represent a departure from more familiar supply disagreements. Typically, it is the suppliers crying foul. In 2014, the Australian Competition and Consumer Commission (ACCC) penalised Coles $10 million for unconscionable conduct against its suppliers.

In an attempt to mediate between the big supermarket chains and their suppliers, the Voluntary Food and Grocery Code of Conduct (the Code) came into effect in June this year.

Interestingly, the Australian Food and Grocery Council says the Colesworth duopoly is only the second most concentrated internationally. With the two powerhouses holding 78% of the market, it’s hard to believe that they lost the top spot.

The ACCC enforces the voluntary Code and requires participants to act:

  • In good faith;
  • Fairly and transparently in their commercial transactions with each other; and
  • Ensure their staff receive sufficient training about the Code.

If a signatory breaches the Code, they will also breach the Competition and Consumer Act 2010 (Cth) (the Act).

Coles also retained the former Premier of Victoria, Jeff Kennett, to act as an independent arbitrator between it and its suppliers when required. Mr Kennett said on the record that as a result of the Code, he is being required less and less to intervene in negotiations as Coles changes the way it deals with its suppliers.

No Code can, however, eliminate the tough negotiations taking place between Arnotts and Coles. Essentially, as a purchaser, you do not have to deal with any supplier if you cannot agree on a price or other terms. Your duties as a buyer in negotiations with your suppliers, and vice versa are as follows:

  • Do not act unconscionably;
  • Do not mislead or deceive the other party; and
  • If you have a substantial degree of market power, do not misuse it for the purpose of eliminating or substantially damaging a competitor, or preventing a new player entering the market.

ACCC Chairman, Rod Sims, is also on the record suggesting that the latest contretemps between Coles and Arnotts does not look to be in breach of the Code. Importantly, the Code does not prevent robust negotiations from taking place in supply dealings.

If you are wondering where your negotiations are leading you, and want to determine where you stand, LegalVision’s competition lawyers can assist you. We can also offer you an Original Tim Tam and a cup of tea.*

Questions? Please get in touch on 1300 544 755.

*LegalVision’s employees consist of Vegans, Paleos and some are even allergic to chocolate. Although we cannot guarantee an Original Tim Tam, we may have a Bliss Ball or piece of fruit, as well as specialist lawyers to help you stay out of trouble.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Catherine Logan

Get a Free Quote Now

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • We will be in touch shortly with a quote. By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.

Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy