Big Box Inquiry and Industry Framework Q&A
21 November 2024
A. On 14 August Parliament launched an inquiry into Australian ‘big box’ retailers to find out more about how they set prices and treat suppliers.
A. The Supermarket Inquiry focused on major retailers of groceries, such as Woolworths, Coles and Aldi while the Big Box Inquiry will concentrate on major retailers such as CostCo, IKEA, Mitre 10 and Bunnings. Both inquiries were established to look at how much these retailers dominate their markets and how they behave towards consumers and suppliers.
While it is not illegal to operate as a monopoly or duopoly in Australia, it is against the law to abuse this power.
A big-box retailer is a retail store that occupies an enormous physical space and offers a variety of products to its customers. The term ‘big box’ comes from the store’s physical appearance.
A. Codes of Conduct exist to regulate trading relationships, especially when there is an imbalance of bargaining power between the parties. They set out the rules retailers must follow when dealing with suppliers. They operate in many industries in Australia, including agriculture and horticulture. For example, the Dairy Code of Conduct sets out the rules milk processors must follow when buying milk from dairy farmers.
A. If a Code of Conduct is voluntary, it only applies to those retailers who volunteer to sign it. If it mandatory, the government decides which retailers must abide by it.
A. No. Unfortunately, growers supplying plants to Bunnings are not protected by a Code of Conduct. Growers of fruit and vegetables supplying Woolworths, Coles and Aldi are protected by the Food & Grocery Code of Conduct, yet growers supplying Bunnings have no protection.
A. When the Food & Grocery Code of Conduct was reviewed earlier this year, GIA asked that the Code be extended to big box retailers such as Bunnings. We did this because plants are covered by the Food & Grocery Code of Conduct yet the biggest retailer of these, Bunnings, is not. The government’s decision to leave Bunnings out is partly what led to the new Big Box Inquiry, which is revisiting whether Bunnings should be subject to a Code of Conduct.
We will show that the power imbalance between Bunnings and growers has created an unfair trading environment for growers. We will ask to government to address this, either by including Bunnings in the Food & Grocery Code of Conduct or establishing a new Code of Conduct that protects greenlife growers supplying Bunnings and other big box retailers.
A. The aim of a Code of Conduct is to improve transparency, certainty and equality for growers. If a Code was introduced to regulate big box retail, it is likely that big box retailers would need to change the way they operate and to accept new rules on how complaints are handled. Some Codes include serious financial penalties for breaches.
A. All parties subject to a Code of Conduct are required to act in good faith and within the law. While growers would gain new rights and protections, most obligations fall on the retailer.
A. No. Codes of Conduct exist to address the power imbalances between very large retailers and their suppliers. Large retailers must meet a threshold to be included. For example, only supermarkets with a turnover of $5 billion per year will be covered by the new Food & Grocery Code of Conduct.
A. The government has recommended that as an alternative to a Code of Conduct, GIA and Bunnings work together to agree an Industry Framework that sets out the rules of trade between Bunnings and suppliers. While a Code of Conduct would provide more certainty for growers, we are pursuing the Framework as an alternative way of improving the trading environment for growers supplying Bunnings.
A. An Industry Framework and a Code of Conduct would aim to do the same thing: create a more balanced relationship between retailers and suppliers to improve the trading environment for growers. If Bunnings agreed to the Framework, they would be bound by it. But it is important to understand that an Industry Framework would not have the same power as a Code of Conduct, which is a legal regulation.
A framework can be tailored to meet the needs of the greenlife industry. Growers will have an opportunity to contribute their ideas and opinions. Bunnings will also have a say.
A. The rights in either a Code of Conduct or a Framework would be automatically granted to growers. Growers can choose to assert their rights, or to ignore them. Evidence shows that growers who understand their rights and apply them see the greatest benefits in their businesses. However, growers don’t have to take up any rights provided in either a Code of Conduct or an Industry Framework.
There are many other examples of rights that work in this way: as consumers, we all have rights under consumer laws that entitle us to a refund for a faulty item we purchase. But if we don’t want to go the effort of returning the item and claiming the refund, we don’t have to.
A. We have appointed a Drafting Group that includes one Bunnings supplier from each state. These growers are working with a retail expert to draft the Framework. The government has suggested that we borrow the relevant parts of existing Codes of Conduct and add elements to make the document suitable for the greenlife industry. Once the draft is ready, GIA will launch a consultation process so growers can have their say on the Framework.
A. GIA is working closely with the state associations to ensure that growers are informed about the consultation and can access it when it opens. We are committed to ensuring that you have time and opportunity to have your say before the deadline.
A. You can say so. Our aim is to present a Framework to Bunnings that reflects the views and wishes of the majority of the greenlife industry. If the draft includes parts you disagree with, or excludes features you would like to see, the consultation provides an opportunity for you to tell us.
A. Realistically, no. But we are hopeful that it will make a significant difference and improve the trading environment for growers.
A. We don’t. But GIA and Bunnings have been meeting regularly and we feel optimistic that together we can negotiate an outcome that is better for growers and tolerable for Bunnings.
A. Stay tuned for details about when the consultation is starting. Information will be broadcast via our usual channels, published on the GIA website and you will also be able to contact your state association for more information.
