Heavy handed Coles hands out after ACCC action
Coles will pay $10 million in penalties for the 15 instances of unconscionable conduct against eight suppliers it has been willing to admit.
The Australian Competition and Consumer Commission (ACCC) brought Coles court over claims it routinely treated its suppliers as subordinates, knowing they could not risk their contracts with the supermarket giant.
In addition to the10 million in penalties, Coles will review contracts with hundreds of suppliers and extend former Victorian premier Jeff Kennett's role in the business.
Kennet will review the details of the supermarket chain's treatment of suppliers and pass judgement on claims for compensation.
Coles’ horrendous treatment of its supplier included telling them that if they didn't agree to new payment schemes, Coles would stop buying their new products or promote existing ones.
The supermarkets threatened to demote some suppliers to a so-called “transactional supplier” level if they did not pass on certain information or did not agree to deals within a tight timeframe.
There were even claims that Coles tried to charge supplier for damage caused to stock after it was delivered at the supermarket.
Despite denying the allegations and vowing to “vigorously fight” the ACCC, Coles appears to be avoiding the long legal battle by agreeing to a joint submission with the ACCC to the Federal Court of Australia.
“We are genuinely contrite your honour, and we have taken steps to ensure that that kind of conduct will not recur,” Coles counsel Neil Young, QC, told the Federal Court judge Michelle Gordon on Monday.
The ACCC's counsel in the case against Coles, Norman O'Bryan SC, had called the issue a “headline test case” and which originally centred on dealings with about 200 suppliers.
The agreement will see former Victorian premier Jeff Kennett paid by Coles to undertake a broad analysis for suppliers on whether their involvement in the supply chain program has been worthwhile, and whether compensation is appropriate.
The report is expected up to 12 weeks from now, and could potentially cost Coles millions of dollars.