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Setback for ACCCs unconscionable conduct cases against Coles

Competition regulator the Australian Competition and Consumer Commission (ACCC) was told by a judge it may have to step back and re-consider what its cases against Coles were and what allegations they were trying to prove, according to newspaper reports.

In a directions hearing on the second case against Coles held the Federal Court in Melbourne last week, Justice Gordon told the ACCC’s counsel that she would not allow the ACCC’s “large-scale litigation” against Coles to turn the court into a “royal commission”.

Lawyers for the ACCC will be in court again this week where they will be asked to present a distilled legal case against Coles, while Coles has been reported as saying it will fight a move by the ACCC to merge the two ‘unconscionable conduct’ cases into one.

In the first case of unconscionable conduct, investigation instituted by the ACCC against Coles on 5 May 2014, in respect to Coles’ Active Retail Collaboration program, the ACCC alleged that Coles developed a strategy to improve its earnings by obtaining better trading terms from its suppliers with a target to obtain $16 million in ARC rebates from smaller suppliers.

In the second case of ‘unconscionable conduct’ on 16 October this year, the ACCC 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 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”.

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