Coles back in court over alleged mistreatment of suppliers

Coles is being taken to the Federal Court by the ACCC for alleged ‘unconscionable conduct’ towards its suppliers. The ACCC alleges that Coles’ conduct contravenes the Australian Consumer Law (ACL).

“This is a matter of significant public interest involving allegations of unconscionable conduct by a large national company in its dealings with small business suppliers in the highly concentrated supermarket industry,” ACCC Chairman Rod Sims said.

“The ACCC alleges that Coles took advantage of its superior bargaining position by demanding money from suppliers that it was not lawfully entitled to, and was, in all the circumstances, unconscionable.”

“The ACCC has commenced these proceedings because it considers the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers,” Sims said.

“These proceedings will provide the court with an opportunity to consider whether conduct of this nature, if proven, is unlawful in the context of large businesses dealing with their suppliers.”

The ACCC has already taken action against Coles for actions relating to its Active Retail Collaboration (ARC) program. These new proceedings relate to conduct in Coles’ day-to-day interactions with suppliers.

The ACCC is alleging that Coles:

• pursued agreements to pay Coles for ‘profit gaps’ on a supplier’s goods, being the difference between the amount of profit Coles had wanted to make on those goods and the amount it had achieved;
• pursued agreements to pay Coles, both retrospectively and prospectively, for amounts it claimed as ‘waste’ on a supplier’s goods which occurred after Coles had accepted the goods, and price reductions, or ‘markdowns’ implemented by Coles to clear goods;
• imposed fines or penalties on suppliers for short or late deliveries.

The ACCC is seeking pecuniary penalties, declarations, injunctions and costs.