Coles has admitted to unconscionable conduct against some of its suppliers and has agreed to pay a hefty $10 million penalty in a settlement with the Australian Competition and Consumer Commission (ACCC).
The proposed agreement forged between Coles and the ACCC seeks to resolve two separate legal actions stemming from the supermarket's conduct in late 2010 and 2011.
The first related to rebates the supermarket giant sought from suppliers to fund the Active Retail Collaboration (ARC) supply chain program.
Though Coles initially denied the allegations and said it planned to oppose the conduct claims, Coles managing director, John Durkan, this week said that Coles “unconditionally apologises and accepts full responsibility for its actions in these supplier dealings”.
"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." Durkan said.
Suppliers could be eligible for refunds from Coles. Under the proposed agreement, an independent arbitor, former Victorian premier, Jeff Kennett, will oversee a formal process to enable Tier 3 supplier in ARC to seek recourse should they believe they have not received benefits from the program commensurate with the costs incurred.
Coles also admitted to unconscionable conduct in relation to the second ACCC proceeding relating to claims for various payments, including payments for purported profit gaps, waste and markdowns, and late and short deliveries.
This action related to allegations in respect of communications and negotiations with a number of suppliers about the failure to deliver products, as well as claims for waste and damage to products and profitability of products.
Coles said it had also identified dealings in relation to a number of suppliers in 2011 where its conduct fell short of accepted business standards.
“These suppliers were not treated with the transparency and respect that they should be able to expect,” said Durkan. "Coles unconditionally apologises and accepts full responsibility for its actions in relation to these five suppliers.”
Durkan also said that since these incidents, Coles has taken many steps to both improve its relationships with suppliers and help its suppliers grow.
"Coles sincerely regrets and apologises for its conduct in these dealings," he said.
"Coles is absolutely committed to upholding the highest business standards and fostering a culture of fairness and decency with respect to all of its dealings including in relation to its suppliers."
The settlement is subject to federal court approval.
