Threatening suppliers is becoming a very expensive mistake for Coles, with the cost to the supermarket giant now heading towards $20 million.
In December last year, the company was fined $10 million after conceding it had engaged in unconscionable conduct, following legal action by the Australian Competition and Consumer Commission (ACCC).
Justice Gordon in the Federal Court said the company had misused its bargaining power and that the misconduct was serious, deliberate and repeated. It found Coles withheld money from suppliers and “demanded payments from suppliers to which it was not entitled by threatening harm”.
In acknowledging its dealing with suppliers in 2011 were inappropriate, Coles appointed Jeff Kennett as an independent arbiter to decide on compensation for around 200 suppliers involved. The former Victorian premier had his own problems with Coles, and complained to the ACCC after he found frozen par-baked bread from Ireland sold as “baked today”. That mistake cost the company $2.5 million for misleading conduct.
The ABC reports that Kennett has met with around 150 suppliers and recommended refunds that will cost Coles around $10 million.
“I have awarded, based on submissions made to me, evidence placed before me, a substantial amount of refunds to those I thought were entitled to them,” Kennett told the ABC.
While he did not say how much Coles were expected to pay, he said “the refunds that I have ordered are approaching that figure [the fine]” and that after talking to suppliers, they reported a noticeable change in the relationship they have with Coles.
“It’s been a substantially expensive exercise for them, but I believe a great deal of good will come out of it for the suppliers and for Coles,” he said.
Kennett expects to finish up in his role next month.
There’s more here.
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