supermarket inquiry

TRANSCRIPT: Supermarket inquiry, Federal Circuit Court Small Business and Codes List

Emily Carter — Wed, 17 Apr 2024 02:57:23 +0000

TRANSCRIPT: Supermarket inquiry, Federal Circuit Court Small Business and Codes List Emily Carter Wed, 04/17/2024 - 12:57

17 April 2024

TRANSCRIPT

Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Stephen Cenatiempo.

Radio 2CC Canberra

Subject: Supermarket inquiry, Federal Circuit Court Small Business and Codes List

Stephen Cenatiempo

Bruce Billson is the Australian Small Business and Family Enterprise Ombudsman. Bruce good to talk to you again.

Bruce Billson

Steve, happy to be with you and your listeners.

Stephen Cenatiempo

This this whole inquiry to me, is a bit of a stunt on the Government's part, but that doesn't mean that there isn't some real opportunities here. And I want to talk mostly about the Food and Grocery Code of Conduct, which at the moment is voluntary. The government is talking about making it mandatory and giving the ACCC some real teeth when it comes to actually enforcing the code of conduct. Does that go far enough? When you were the small business minister, you were a big advocate of this code of conduct. Is making a voluntary code mandatory going to change anything?

Bruce Billson

Your memory is very good Steve. I was the one that actually introduced it back in 2015, and it was designed to sort of make sure that those relationships between small business suppliers and supermarkets were kept in a reasonable state so there were bumper rails around things that could be asked of suppliers and the supermarkets, clearly with a dominant position, weren't using that to the harm and detriment of their supply chain. So that was the idea behind it.

And one of the bits of magic that's in it is there's actually an independent arbitration function and those independent arbiters that operate within the supermarkets themselves can award amounts of up to $5 million where they feel there's been some appalling conduct.

We haven't seen many matters raised, though, because a cloud that sits over all of these interactions is fear of retribution. If you and I have invested everything we own and our house and our first born into our business, and to have any kind of volume in terms of the production to drive efficiencies, we need to have a relationship with the supermarket.

So, what we've been saying is, look, there needs to be some other mechanisms that support the code. At the moment it people say it's voluntary. It's actually an opt-in binding code. That is once you sign on the dotted line, it's binding. You're obliged to meet those obligations. So, the question becomes, well, what do you gain and what do you lose if it becomes a formalised mandatory imposition type code that might limit the scope for things like those up to $5 million arbitration determinations.

The other thing that we want to sort of call out, though, is most of the disputes between a supplier and a supermarket are between parties that want to continue to do business with each other. So, it's not a knock it down, strike them out, see who prevails and the victor wins. And that's the end of it. In most cases, these businesses want to keep dealing with each other. We've been emphasising a problem-solving approach. Not one that sees a formal dispute, but one that can see someone get inside the business, work with the two parties, and particularly for small suppliers, have someone on their side to help navigate the complexity of doing business with one of these supermarket chains. That's where we've been focusing our effort.

But there's also a second important stream. There's a whole bunch of laws at the moment that try and support fair and reasonable commercial conduct, whether it's between suppliers and supermarket chains or more broadly in the economy.

And too often, Steve, those laws aren't deployed. They are like hunting dogs that sit on the porch but never get released because it's so hard to enforce them. You enforce them through the Federal Court of Australia. You and I, as a family business having a beef with a supermarket chain or feeling that they've behaved in a false and misleading way or there's been some misuse of their market power and we want to run our case, we need a quarter of a million dollars. We need to wait for two years for a decision. And then we have to worry that if we lose, we pay for the other party's costs. That's why everyone hopes the ACCC will pick up these cases because it's so risky, it's so darn expensive. And that's where we think there's a real opportunity for change and improvement.

Stephen Cenatiempo

So, where's the opportunity there to set up something like a tenancy tribunal type thing that you might have at a state level. Or does it have to be more binding, does it have to be within the court system somehow?

Bruce Billson

Yeah, it does. Under our Constitution, Chapter III, if there's a decision imposed on parties under the federal law, it needs to be decided by a court.

So, what we've argued for is why not have the Federal Family and Circuit Court, one that's more responsible and more available, have a Small Business and Codes List as part of its business agenda.

The parties would pay their own costs, not the other party’s if they lose. There’d be rules around how much evidence you can bring forward. You'd get an early sense of what was going on by compulsory alternative dispute resolution mediation within weeks. And you’d get a decision within a handful of months that the judge would sign-off on. But most of the work is done before it gets to His or Her Honour.

Stephen Cenatiempo

So, almost like a Federal Court of petty sessions, for lack of a better way.

Bruce Billson

And that's a good way of describing it. Most people would know there are small claims tribunals and the like it at a state level. We need something like that at a federal level so that if you and I feel we've been infringed upon - say we've bought a franchise, we put 700,000 bucks into buying it, the franchisor unilaterally changes the business model – we are driven into a ditch, we're aggrieved.

Now if we go to the ACCC and they're using taxpayer’s money, so they have to ration it, Steve, and choose which cases to pursue. So, they choose the ones that are of material significance to the economy, where there's systemic or ongoing problems or where there's considerable public interest.

The fact that yours and my life has been ruined and we've lost nearly three quarters a million bucks, will never get through those gates. So, what do we do? We need to be able to defend our own economic interests in a right-sized justice process, that gets an early decision, it’s affordable for a small business to utilise, and moreover, it can get the businesses back to business.

And that's a way of getting better outcomes in my eyes.

Stephen Cenatiempo

Makes a lot of sense. Bruce, always good to talk to you. Appreciate your time this morning.

Bruce Billson

Thanks, Steve.

TRANSCRIPT: Supermarket inquiry, Federal Circuit Court Small Business and Codes List

Emily Carter — Wed, 17 Apr 2024 01:27:11 +0000

TRANSCRIPT: Supermarket inquiry, Federal Circuit Court Small Business and Codes List Emily Carter Wed, 04/17/2024 - 11:27

16 April 2024

TRANSCRIPT

Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Ross Greenwood.

Business Now, Sky News

Subject: Supermarket inquiry, Federal Circuit Court Small Business and Codes List

Ross Greenwood

Do supermarkets use their size to disproportionately apply pressure on smaller suppliers. And if so, what can be done about it? Well, one organisation that will hear these claims is the small and family business Ombudsman, who also put in a submission to this Senate inquiry. The Ombudsman is Bruce Billson, who joins me now from Canberra. Bruce, always good to chat to you about this. The whole aspect of this really goes to the balance of power. Who has the power in these supply agreements?

Bruce Billson

The big issue is how do you manage that. If you and I were running a small supply business and we wanted any kind of scale, we'd almost have to look at a supermarket chain relationship and that puts us in a precarious situation Ross.

If we invest considerably to meet that scale, then we don't want that sunk investment just sitting around at risk of being played a little bit by the supermarkets if they want to exercise that power. And that's where the Food and Grocery Code comes in and tries to make sure those relationships are respectful, commercially reasonable, and that there are some bumper rails to guide that conduct where there is that risk that the dominant party might use its muscle in commercial negotiations.

Ross Greenwood

Okay, so there's a few ways in which you've recommended that this balance of power be adjusted, some of which have been actually looked at in the Emerson review of the Code of Conduct. One, a mandatory code; two, more powers for the ACCC; but one that you've come up with which hasn't really been talked about is this recommendation to introduce a Small Business and Codes List in the Federal Circuit Court and Family Court of Australia. What exactly does that do and why would that change the balance of power?

Bruce Billson

Put simply, Ross, it's almost like a small claims tribunal in the federal jurisdiction. These federal laws that govern competition and fair conduct and the oversight of industry codes like the one we're talking about, if a dispute arises and a party wants to exercise its legal right to defend its interests, it's off to the Federal Court of Australia. Now that's $250,000 likely in cost. You might have to wait two years before you get your time to argue your case. And then there is that risk that if you lose, you get to pay the costs of the other side. Now, that is an extraordinarily terrifying pathway to go. So, what small businesses tend to rely upon is hoping and a praying that the ACCC will pick up the matter on their behalf.

What we're urging is a change to the justice system. With the Federal Circuit Court Small Business and Codes List, a simple idea empowers small business economic interest holders to actually advance and protect those themselves through appropriate mechanisms in terms of cost, timely response, and, frankly, a chance to restore whatever harm’s being caused back to a place where the business can get to business.

We think that is a fundamental game changer and too often people talk about aspects of our competition and fair conduct laws and don't realise they look great, but they are hunting dogs that won't leave the porch unless the commission picks up a case and runs it on behalf of an aggrieved business.

Ross Greenwood

But the reality of this is also that if you suddenly do not supply a supermarket, or if you suddenly find that you don't get the shelf space that you need, you’re out of business before you even get to the next six-monthly hearing inside a court. That is a fundamental issue. So, in this particular case, because of the precarious nature of many small businesses, they need to get swift justice. That's the important aspect of this.

Bruce Billson

Absolutely, and the model we're proposing would see that accessible within a handful of months, not a number of years. It's also about recognising that the ACCC, using taxpayer’s money Ross, has to choose which cases to pursue. So, they tend to go for the ones that have a material impact on the economy, a systemic failure or considerable public interest. If you and I, as individual suppliers are being treated in a shabby way and contrary to what the Code or some of the protections in the competition law would expect, we're not going to get through those gates. So, there's the promise of legal protection and those bumper rails around fair commercial conduct, but not the follow through to make sure there's actually consequences for those that step out of what's reasonable in terms of a market economy.

Ross Greenwood

I'll tell you what, it's great to have your insight on the program, Bruce. I know you’ve been working with small business for such a long time and many thanks for your time today.

Bruce Billson

Good to be with you and your viewers Ross.