Brands' intellectual property is safe from being plundered by supermarkets Coles and Woolies after a new agreement was struck offering tighter protection for brands.
The deal was brokered by the Australian Food and Grocery Council (AFGC) after an ongoing investigation into the grocery industry and its practices. The Food and Grocery Code aims to establish a set of principles that supermarkets will be held to in regards trading relationships with suppliers.
With the growth of the own label market, brands are in the unusual situation of having to present ideas and pitches for new product ranges and innovations to buyers at the supermarkets who are not only their customer, but also their competition.
A similar situation in the UK was in part behind the creation of an independent supermarket ombudsman to oversee the industry and handle disputes.
Under the voluntary deal, which was drawn up over the weekend, retailers must respect the IP rights of their suppliers and not infringe IP in the development of their own brand ranges. It means that information provided by suppliers may only be used for the purpose it was submitted, not to play a part in developing own-label products or marketing activity.
Brands have been reticent to start legal procedures against their customers in the past but the new regulations means the Australian Competition and Consumer Commission (ACCC) can investigate complaints from suppliers. The Code includes parameters for low cost and fast resolution of disputes.
The recommendations aim to improve the compliance processes in place at supermarkets. Brand suppliers had wanted to enforce a separation of the buying and own-label buying functions at supermarkets but it is not part of the agreement. However, supermarkets will be required to appoint internal compliance officers who sit separately from the buying and development teams and report regularly.
It also includes greater transparency over supermarket's shelf allocation for own-label goods and branded products.
Industry hopes the code will be prescribed by the Federal Government under the Competition and Consumer Act.
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