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ACCC takes action against Coles

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court of Australia against Coles Supermarkets alleging Coles engaged in ‘‘unconscionable conduct’’ against some suppliers.

May 13, 2014 3:09am

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court of Australia against Coles Supermarkets alleging Coles engaged in ‘‘unconscionable conduct’’ against some suppliers.

The ACCC alleges that in 2011, Coles developed a strategy to improve its earnings by obtaining better trading terms from its suppliers.

‘‘It is alleged that one of the ways Coles sought to improve its earnings was through the introduction of ongoing rebates to be paid by its suppliers in connection with the Coles ARC program, based on purported benefits to large and small suppliers that Coles asserted had resulted from changes Coles had made to its supply chain,’’ the ACCC claims.

‘‘Coles’ target was to obtain $16million in ARC rebates from smaller suppliers.’’

Coles has replied that the ACCC legal action concerned a detailed supply chain program implemented by Coles more than two years ago as a part of its strategy to develop a more efficient and internationally competitive supply chain.

‘‘The project involved improvements to both supply chain collaboration and efficiencies in logistics.

‘‘It was designed to deliver benefits to Coles, suppliers and customers through lowering costs and improving availability of stock in our stores,’’ the Coles statement said.

‘‘Coles will vigorously defend the allegations made against it by the ACCC.’’

Australian Dairy Farmers president Noel Campbell said the ACCC would allege Coles had engaged in unconscionable conduct towards 200 of its smaller suppliers in breach of the Australian Consumer Law.

‘‘ADF welcomes the ACCC’s decision to take Coles to the Federal Court of Australia for using undue pressure and unfair tactics in negotiating with suppliers,’’ Mr Campbell said.

‘‘Coles’ alleged behaviour towards suppliers includes providing misleading information and taking advantage of their superior bargaining position.

‘‘We very much look forward to the result of the court case, given ADF’s strong track record of advocacy to the ACCC since the introduction of the $1 per litre retail milk price.

‘‘This latest action by the ACCC once again highlights the need for a mandatory code of conduct, including the establishment of an independent supermarket ombudsman with penalties to balance the excessive power of the major retailers.’’

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