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Regulator takes Coles to court over supplier payments for profit, stock losses

The Australian Competition and Consumer Commission has launched additional legal proceedings against Coles Supermarkets and alleged 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.

“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.

Jos de Bruin, CEO of Master Grocers Australia, said that the details of the ACCC case lodged against Coles reveal a staggering level of business immorality.

“The ACCC has alleged that Coles has engaged in ‘unconscionable conduct’ against suppliers. In corporate terms that’s as serious as it gets but even that doesn’t really capture the sheer cynical bloody-mindedness of how one of Australia’s major corporations is alleged to have behaved,” he said.

“The ACCC affidavit filed against Coles alleges that once a year there was a day known as ‘Profit Day’ or ‘Perfect Profit Day’ on which Coles’ managers demanded payments from suppliers to make up purported “profit gaps”, even though Coles “had, and knew that it had, no contractual or other lawful entitlement to the payments.”

In one case it’s alleged a Coles manager called on staff to exceed the target of $750,000 and go for $1 million “for our profit day”.

These latest proceedings arise out of the same investigation instituted by the ACCC against Coles on 5 May 2014, in respect to Coles’ Active Retail Collaboration program.

The ACCC is seeking pecuniary penalties, declarations, injunctions and costs in the Federal Court.

 

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