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

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.

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