ACCC calls for more Transparency in the Wine Grape Sector
The ACCC’s Interim Report focuses primarily on the “warm” inland regions, but is highly relevant to all winemakers and grape growers in Australia. It foreshadows recommendations for changes to law and industry practice that may require significant changes to contract terms and management of grower–winemaker relationships
On Monday, the Australian Competition and Consumer Commission (ACCC) released an Interim Report on its Wine Grape Market Study. This follows the Grower Survey, Issues Paper and extensive industry consultation, carried out by the ACCC throughout 2018 and early-2019.
The Market Study has focussed primarily on the sale and purchase of wine grapes in what the ACCC has described as Australia’s three “warm climate” regions (namely the Riverland, Murray Valley and Riverina).
That said, it is clear that the ACCC’s likely final recommendations will have significant implications for winemakers and growers in all regions across the nation.
What were the ACCC’s key Interim recommendations?
- In relation to quality assessment, that winemakers and growers agree, in writing, upon objective fruit quality assessment methods in their contracts, and that the industry reduce its reliance on subjective measurements to determine grape pricing
- In relation to price transparency, that winemakers in warm climate regions be required to provide indicative and final grape prices to an independent body, for public release on certain defined dates
- In relation to payment terms, that payment terms in grape supply contracts be shortened, so growers are paid in full within 30 days of grapes being delivered
- In relation to the Wine Industry Code of Conduct, that the Code be “substantially strengthened” and that all “large winemakers” become signatories to the Code – the ACCC may further recommend that the Code become mandatory, if the rate of voluntary adoption is insufficient
- In relation to contracting practices, that winemakers review their grape supply agreements to identify and remove any terms which contravene the “unfair contract terms” provisions of the Australian Consumer Law – the ACCC has indicated it may take enforcement action where it considers that existing contracts contain such terms and where winemakers do not now take the opportunity to remove them
What are the implications of the Interim Report?
The ACCC’s final recommendations will likely have significant ramifications for growers and winemakers in all regions of Australia. Of particular relevance are the potential for enforcement action in relation to unfair contracts, the shortening of payment terms and the mandating of the Code of Conduct, which would each affect all grape supply arrangements (whether written or verbal).
Winemakers and growers should review their standard grape supply agreements.
ACCC is seeking feedback on Interim Report
The ACCC has asked for feedback on the Interim Report by 28 June 2019, including as to how its recommendations might best be implemented, on what time-frames and with what exceptions or exclusions (if any). It expects to release a Final Report in September 2019.
Grapegrowers and winemakers should give careful attention to the Interim Report, and take the opportunity now to provide feedback to the ACCC on its proposed recommendations (including via industry and representative bodies).
Finlaysons Wine Roadshow 27
The Finlaysons Wine Roadshow travels to ten leading Australian viticultural regions annually, to give legal and commercial advice to winemakers on topical industry issues relevant to their businesses. This year, Wine Roadshow 27 will focus on the impact of the ACCC’s Market Study. The CEOs of Wine Australia and Australian Grape & Wine will also be attending to provide updates on their respective agendas. Tickets go on sale later this month.
This Alert is intended as general information only. It does not purport to be comprehensive advice or legal advice. Readers must seek professional advice before acting in relation to these matters.