Coles Supermarkets has been accused of demanding unjust payments from suppliers by the Australian Competition and Consumer Commission (ACCC).
The ACCC has launched Federal Court action against Coles, alleging unconscionable conduct against 5 suppliers.
The competition watchdog alleges that Coles had something called “perfect profit days” when it would demand additional payments from suppliers to fill revenue gaps and ensure the profit Coles wanted to make on those goods was achieved.
This latest legal battle is one of the most serious claims the competition watchdog has made against the retail giant.
The ACCC alleges Coles pursued agreements, sometimes retrospectively, for amounts it claimed as “waste” on a supplier’s goods after the supermarket had accepted the goods, as well as price reductions, or “markdowns” implemented by Coles to clear goods. Fines or penalties were also imposed on suppliers for short or late deliveries.
It’s alleged that the causes of both profit gaps and “waste and markdowns” were usually outside the control of suppliers, and the fine amounts Coles imposed were unrelated to the value of the goods, and to any loss Coles might actually have suffered from short or late delivery.
The ACCC claims to have internal company emails that outline the supermarket’s behaviour.
The ACCC alleges that Coles demanded agreements to pay money where it knew, or ought reasonably to have known that it had no legitimate basis for doing so; failed to provide adequate information so suppliers could understand the basis of demands for payment; and applied undue pressure.
Coles denies the ACCC’s claims.
ACCC Chairman Rod Sims said the legal action will look at whether the conduct is unlawful when it comes to large businesses dealing with suppliers.
“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,” he said.
This latest court case follows on from the same investigation that led the ACCC to begin legal action against Coles in May over its Active Retail Collaboration (ARC) program.
The latest case will begin on Friday, 24 October, in Melbourne
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