Supermarket giant Coles has categorically denied claims it’s engaged in unconscionable conduct by forcing suppliers to pay additional rebates for a new supply chain program.
According to SMH, Coles issued a 34 page document to the Federal Court in Melbourne on Monday (30 June) rejecting claims made by the Australian Competition and Consumer Commission (ACCC) that it used unfair tactics to force suppliers to pay ongoing rebates to participate in the Active Retail Collaboration (ARC) program.
The ACR program was developed by Coles in 2011 to improve earnings by obtaining better trading terms from its suppliers. The ACCC alleges that in relation to 200 of its smaller suppliers, Coles required agreement by the supplier to the rebate, which ranged from about 0.7 percent to more than one percent of sales, within a matter of days. If these suppliers declined to agree to pay the rebate, Coles personnel were allegedly instructed to escalate the matter to more senior staff, and to threaten commercial consequences if the supplier did not agree. The ACCC alleges that, in a number of cases, threats were made when suppliers declined to agree to pay the rebate.
The ACCC alleges Coles engaged in a number of acts of unconscionable conduct including:
- Providing misleading information to suppliers about the savings and value to them from the changes Coles had made;
- Using undue influence and unfair tactics against suppliers to obtain payments of the rebate;
- Taking advantage of its superior bargaining position by, amongst other things, seeking payments when it had no legitimate basis for seeking them.
Coles denies the claims, arguing participation in the program was voluntary and that it maintained trading relationships with suppliers regardless of their involvement.