Coles has handed $12 million over to 100 of its suppliers following a review by independent arbiter, former Victorian Premier Jeff Kennett.
Kennett also instructed Coles to allow suppliers to exit the ARC program without penalty or have their ARC contribution rebates reviewed, which is expected to result in further big ongoing savings for suppliers.
Coles and the Australian Competition and Consumer Commission (ACCC) appointed Kennett last year to independently review the relationship between the retailer and its suppliers. According to Kennett, he found that Coles' category buyers were at times aggressive and threatening to suppliers.
The Australian Competition and Consumer Commission (ACCC) said it welcomed the news of the refund.
“The arbitration process conducted by Mr Kennett has proven both extremely timely and effective with significant benefits to suppliers,” ACCC Chairman Rod Sims said.
“The process will also deliver flow on effects for suppliers more broadly as a result of changes Mr Kennett says Coles has begun to implement that affect the way it deals with its suppliers.”
The refunds process arose out of the resolution of two proceedings commenced by the ACCC against Coles in 2014: the ‘ARC proceedings’, and the ‘claims proceedings’.
In December, the Federal Court made declarations in both proceedings by consent that Coles had engaged in unconscionable conduct in 2011 in its dealings with certain suppliers.
As part of the resolution, Coles also provided a court enforceable undertaking to the ACCC to establish a formal process to provide options for redress for over 200 suppliers, and in December 2014, Kennett was appointed to administer the process.
Sims said: “The ACCC recognises and acknowledges Coles’ co-operation in acting upon the binding determinations made by Mr Kennett and in making some of the non-binding changes recommended by Mr Kennett.
“It moved quickly and without challenge to accept the decisions and implement changes.”
AFGC CEO Mr Gary Dawson, said that the arbitration process conducted by Kennett, along with a recent decision by Coles to sign up to the Food and Grocery Code of Conduct, demonstrated improvements in the way in which Coles is engaging with its suppliers.
“These are important and positive changes being made by Coles. We have certainly encouraged suppliers who feel they have been poorly treated by Coles to take the opportunity of raising their concerns with Mr Kennett.
“While not everyone who has been through the Kennett review is happy with the outcome, most have acknowledged it is a genuine process aimed at resolving disputes and awarding compensation,” said Dawson.
“It is also important to note that while the 200 businesses named in the ACCC action have been the focus of the Kennett review, the arbitration process is open to any of the thousands of suppliers dealing with Coles.”
