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ACCC takes Coles to court over “unconscionable conduct”

The Australian Competition and Consumer Commission (ACCC) have today taken further legal action against Coles, claiming that the supermarket chain engaged in unconscionable conduct against small business suppliers.

The ACCC alleges that Coles took advantage of its superior bargaining position by, among other things, demanding payment agreements without legitimate basis, withholding money, and refusing to repay money.

“This is a matter of significant public interest involving allegations of unconscionable conduct by a large national company in its dealings with small business suppliers in the highly concentrated supermarket industry,” ACCC Chairman Rod Sims said.

“These proceedings will provide the Court with an opportunity to consider whether conduct of this nature, if proven, is unlawful in the context of large businesses dealing with their suppliers.”

The ACCC alleges that Coles pursued suppliers for payment, both retrospectively and prospectively, for amounts it claimed as “waste” on a supplier’s goods which occurred after Coles had accepted the goods, and price reductions, or “markdowns” implemented by Coles to clear goods.

The allegations stem from the same investigation that saw the ACCC up against the supermarket chain in respect to Coles’ Active Retails Collaboration (ARC) program.

“The proceedings relating to ARC allege unconscionable conduct in the design and implementation of the ARC program specifically, whereas these new proceedings concern conduct which occurred in the course of Coles’ day to day interactions with suppliers,” Mr Sims said.

Jos de Bruin, CEO of Master Grocers Australia, said the details of the case revealed “a staggering level of business immorality”.

“Coles and Woolworths together control 75%-80% of the market. This means suppliers have little choice but to go along with bullying tactics,” Mr de Bruin said.

“The revelation of this abhorrent behaviour makes the review into Australia’s competition law even more compelling and important for the welfare of consumers, businesses and suppliers.”

The ACCC has instituted proceedings in the Federal Court of Australia against Coles Supermarkets Australia Pty Ltd and Grocery Holdings Pty Ltd (together, Coles) and is seeking pecuniary penalties, declarations, injunctions and costs. The matter will be heard on 24 October 2014.