Coles admits unconscionable conduct in supplier dealings

Coles has made a number of admissions of unconscionable conduct in relation to certain dealings with suppliers and agreed to make a legal settlement with competition regulator the Australian Competition and Consumer Commission (ACCC).

Coles unconditionally apologised and said it accepts full responsibility for its actions in several supplier dealings that led the ACCC to allege that on a number of occasions in 2011, Coles contravened the Australian Consumer Law.

The ACCC said that it and Coles will make joint submissions to the Federal Court of Australia seeking orders from the Court, after agreeing to resolve the two separate proceedings instituted by the ACCC alleging unconscionable conduct by Coles when dealing with certain suppliers.
The ACCC took legal action in May and October 2014 against Coles and was seeking penalties of $10 million in the Federal Court.

In a media statement, Coles supermarkets said after being presented with the ACCC’s claims, Coles has extensively reviewed the materials made available by both the ACCC and its own internal investigations.

Coles managing director, John Durkan, said: “I believe that in these dealings with suppliers, Coles crossed the line and regrettably treated these suppliers in a manner inconsistent with acceptable business practice. We will await the Judge’s decision in these matters.”

In respect of a supply chain program in 2011 titled Active Retail Collaboration (ARC), smaller suppliers were asked to pay an ongoing rebate, in return for collaborative planning and greater data sharing, through access to the Coles Supplier Portal and changes to ordering quantities to ensure they were economically efficient.

Coles has proposed an undertaking to the ACCC to establish a formal process that will allow any Tier 3 supplier in ARC to seek recourse, led by an independent arbiter and will be conducted confidentially where suppliers will be assisted by an independent auditing firm.

The second ACCC action related to allegations in respect of communications and negotiations in late 2010 and 2011 with a number of suppliers about the failure to deliver products, claims for waste and damage to products and profitability of products.

Mr Durkan said that since these incidents occurred in 2011, Coles has implemented a best practice compliance framework to ensure that it treats suppliers in an open and fair manner.

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