Coles owns up to unconscionable conduct

Coles has admitted to unconscionable conduct in its dealings with suppliers in 2010 and 2011 after the ACCC instituted proceedings on the grounds that Coles had contravened the Australian Consumer Law.

“Coles unconditionally apologises and accepts full responsibility for its actions in these supplier dealings,” said Coles Managing Director John Durkan.

“I believe that in these dealings with suppliers, Coles crossed the line and regrettably treated these suppliers in a manner inconsistent with acceptable business practice. We will await the Judge’s decision in these matters.”

Coles had denied all allegations of unconscionable conduct previously, but admitted to the conduct after reviewing the ACCC’s materials on the matter and an internal investigation.

“ACCC Chairman Rod Sims said at the time of launching this action ‘the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers’. In the dealings we have identified, I believe that statement is appropriate,” Durkan said.

The ACCC alleged that Coles engaged in unconscionable conduct with regards to its Active Retail Collaboration (ARC), which saw smaller suppliers forced to pay an ongoing rebate.

“In these particular dealings, Coles was not respectful of supplier needs for full and timely transparency, and of the responsibility attached to Coles’ bargaining power,” the retailer said in a statement.

The ACCC plans to establish a formal process allowing any Tier 3 supplier in ARC to seek recourse if they think they have not received benefits from the program commensurate with the costs incurred. Coles will bear the cost of this process, which will be led by an independent auditing firm.

The second ACCC action related to allegations about suppliers’ failure to deliver products, as well as claims for waste and damage to products and product profitability.

“These suppliers were not treated with the transparency and respect that they should be able to expect. Coles unconditionally apologises and accepts full responsibility for its actions in relation to these five suppliers,” Durkan said.

“Since these incidents occurred in 2011, Coles has taken many steps to both improve its relationships with suppliers and help its suppliers grow.”

Coles has since established a Supplier Charter that aims to strengthen relationships with suppliers. Jeff Kennett, former Victorian Premier, is the independent arbitrator under the charter.