Supermarket giant Coles has rejected claims of alleged unconscionable conduct by the ACCC.
The competition watchdog yesterday announced that it will be instituting proceedings in the Federal Court against the supermarket over allegations that it took advantage of its superior bargaining position by ‘demanding money from suppliers that it was not lawfully entitled to.’
“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,” ACCC chairman Rod Sims said in a statement.
“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.”
Coles says that the allegations specifically concern a limited number of dealings with five Coles suppliers in the lead up to the Christmas 2011 trading period in addition to issues related to waste and damaged products. Coles says that communications with the suppliers referred to in the ACCC’s Statement of Claim were part of ongoing commercial negotiations involving a much broader, longer-term trading relationship with each supplier.
“These are normal topics for business discussions between grocery suppliers and retailers in Australia and around the world. Furthermore, commercial negotiations can be robust, regardless of the industry or sector,” the supermarket said in a statement.
“The allegations include a day previously called Profit Day. This was an administrative day where discussions were held with suppliers in relation to outstanding claims and additional business opportunities.
“These discussions, including those concerning profit gaps, were aimed at improving the profitability of products. Profit gaps can occur when a product’s financial performance fails to meet business plans or expectations discussed between Coles and its suppliers. Products with poor sales performance limit Coles’ ability to deliver value to customers.”
Coles also added that the failure of suppliers to deliver agreed quantities of stock at agreed times, high levels of waste due to delivering products too close to their use by date, mishandling/ packaging damage and the poor performance of products in general are all issues that are “actively managed” by the supermarket.
The proceedings have risen out of the same investigation that was instituted by the ACCC against Coles on 5 May in respect to Coles’ Active Retail Collaboration (ARC) program.
In June, Coles categorically denied claims it engaged in unconscionable conduct by forcing suppliers to pay an additional rebate.
As part of the Statement of Claim, the ACCC is seeking pecuniary penalties, declarations, injunctions and costs. The matter is listed for a directions hearing in Melbourne at 10am on Friday 24 October 2014 before Justice Gordon.