Da ALDI Code: ALDI and the new Grocery Code of Conduct

The Australian Food and Grocery Council and Australia’s two largest supermarket retailers, Coles and Woolworths, have reached agreement on the terms of a new Food and Grocery Prescribed Industry Code of Conduct (the “Code”).  ALDI has thus far refused to sign up to the Code.

The new voluntary Code covers several aspects of supermarket regulation including Grocery Supply Agreements and their terms, duties to act in good faith and provide contact details, mechanisms for dispute resolution, and training, record-keeping and reporting requirements.

Most interesting for IP Whiteboard, however, is its section on “Retailer Own Brand Products” (section 9), which concerns retailers’ treatment of suppliers’ intellectual property rights.  ALDI has a reputation for packaging its own brand products in a way strikingly similar to more established like products, something IP Whiteboard has discussed (and tested!) earlier this year (see here and here). Woolworths indicated in Fairfax media last week that it believes this explains ALDI’s reluctance to sign on to the Code.

Under the section on Retailer Own Brand Products, the Code states that a retailer:

  • will not infringe any intellectual property rights held by supplier when developing own brand products,
  • cannot misuse or make accessible any confidential information disclosed by a supplier regarding product development, proposed promotions and pricing, and must have systems in place to ensure this,
  • must not require a supplier to license any intellectual property right as a condition of supply, and
  • must publish shelf-space allocation principles, and apply them without discrimination in favour of Retailer Own Brand Products.

While the first of these points adds little to existing IP laws, the requirements for developing confidentiality compliance systems and shelf-space allocation principles place a burden on signatories, and the restrictions on contractual negotiation and shelf spacing may also prove undesirable for some retailers.

ALDI has told the media that it has not signed up to the Code because of a fear that compliance costs would drive up prices (see here).  Metcash, the main wholesale supplier to IGA supermarkets and owner of the IGA trade marks, has also felt pressure to sign up to the Code.  Metcash has explained that it has not signed up because it was not part of the negotiations, and that the Code is irrelevant to its business as a wholesaler, rather than a retailer (see here).

Whatever the reason for ALDI’s refusal to sign, it is yet to be seen how effective the Code will be. What is certain, however, is that, for now, Saint Etienne lager and El Tora Taco Kits remain available for purchase.