The Australian Consumer and Competition Commission (ACCC) is looking at complaints that Woolworths allegedly demanded its suppliers pay millions of dollars to fund an supermarket discount war.
Fairfax Media has emails from suppliers claiming Woolworths is passing on the costs of its discount “Cheap Cheap” marketing campaign to them, asking for extra cash payments to fund “the gap between sales and profit growth” – a process otherwise known as “margin filling”.
According to Fairfax, suppliers have allegedly been asked to fund as much as 80% of the lost profit Woolworths would have made if it had not discounted prices. It says Woolworths has already received amounts ranging between $70,000 and $1 million.
A Woolworths spokesman has rejected suggestions it has acted unconscionably, saying its buyers were “well aware” of the law.
ACCC chairman Rod Sims said the industry watchdog had “received recent further complaints about supermarket supplier issues which we will consider. We will make no further comment at this stage”.
If the ACCC decides to act and Woolworths is found to have breached competition and consumer laws, it could face a penalty similar to the $10 million fine and up to $16 million in reparations Coles was ordered to pay this week to settle a case based around similar allegations.
Coles has since apologised and appointed former Victorian premier Jeff Kennett to help review contracts with hundreds of suppliers after managing director John Durkin admitted Coles had “crossed the line”.
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