The ACCC and supermarket group Coles have settled both cases of unconscionable conduct aimed at the company. Coles has admitted that it engaged in unconscionable conduct against a number of suppliers in 2011.
The ACCC is now seeking consent orders from the Federal Court in Melbourne. Former Victorian premier, Jeff Kennett, has been approached to act as an independent arbiter over refunds from Coles to suppliers of certain payments they made to Coles. Kennett is already overseeing Coles’ treatment of suppliers, in a role he assumed earlier this year.
The ACCC had launched two court actions against Coles this year. Its most recent action, which was launched in mid October, claimed the supermarket acted unconscionably when it demanded payments from five food and grocery suppliers in 2011. The commission alleged that Coles took advantage of its superior bargaining position by demanding money from suppliers to which it was not lawfully entitled. The money amounted to hundreds of thousands of dollars.
In May, the ACCC launched its first case against Coles, stating that it used threats to demand payments from up to 200 suppliers in relation to its Active Retail Collaboration program and in contravention to the Australian Consumer Law. The ACCC contended that Coles had forced the suppliers to pay extra rebates to fund the cost of a supply chain improvement program.
At first, Coles denied the allegations and said it would vigorously defend both cases. However, Wesfarmers chairman, Bob Every, later told shareholders at the annual meeting that Coles had made mistakes in its dealings with suppliers: "There is no doubt Coles has made some mistakes in the past. Since the (ACCC) investigation started Coles has taken many steps to seek to avoid similar problems in the future. The ACCC commenced its investigation in June 2012 and the board has had strong oversight of the matter since it began and continues to monitor it closely."
These steps included Coles working with the Australian Food and Grocery Council, Woolworths and the federal government to develop a voluntary industry code of conduct, strengthening Coles' internal code of conduct, launching a supplier charter and dispute resolution process, and training buyers on competition laws.
