The Council of Small Business Australia (COSBOA) is calling for bullied suppliers to come forward as the Australian Competition and Consumer Commission (ACCC) initiates further action against Coles over supplier conduct.
The ACCC has instituted proceedings in the Federal Court for allegedly taking advantage of its superior bargaining position by demanding money from suppliers that it was not lawfully entitled to.
ACCC Chairman Rod Sims said the latest allegations are a matter of significant public interest as they relate to “unconscionable conduct by a large national company in its dealings with small business suppliers in the highly concentrated supermarket industry”.
“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,” Sims said.
COSBOA executive director, Peter Strong, meanwhile, is calling on suppliers who have been “stifled, who have been forced to label their professionalism and innovation skills behind Coles and Woolworth labels, or just been bullied” to let COSBOA know.
“No doubt the highly paid and experienced lobbying army of Coles and Woolworths will now be mobilised in a campaign to maintain their dictatorship. COSBOA will actively support the ACCC’s current pursuit and continue to fight for equal rights and opportunities for small business people everywhere,” Strong said.
The latest proceedings arose out of the same investigation that led to the ACCC action against Coles in May over the retailer's Active Retail Collaboration (ARC) program.
However, these new proceedings concern conduct which occurred in the course of Coles' day to day interactions with suppliers, and allege that in 2011, Coles:
- pursued agreements to pay Coles for “profit gaps” on a supplier’s goods, being the difference between the amount of profit Coles had wanted to make on those goods and the amount it had achieved;
- pursued agreements to pay Coles, 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;
- imposed fines or penalties on suppliers for short or late deliveries.
It is alleged that the causes of both profit gaps and “waste and markdowns” were usually outside the control of suppliers, and that the amount of the fines Coles imposed was unrelated to the value of the goods, to any loss that Coles might actually have suffered from the short or late delivery, or to the reasons for the short or late delivery.
The ACCC alleges that Coles took advantage of its superior bargaining position, though Coles has responded saying the allegations concern a limited number of dealings with five Coles suppliers three years ago.
“The allegations involve communications and negotiations about the failure to deliver products in the lead-up to the Christmas 2011 trading period, as well as waste and damage to products and the profitability of products,” the retailer said.
“The allegations include a day previously called Profit Day. This was an administrative day where discussions were held with suppliers in relation to outstanding claims and additional business opportunities."
Coles also said that during the cited period in 2011, its team members were working hard to get products on shelves for its customers in the lead-up to Christmas, the busiest trading period of the year. It also said it had taken steps to improve its dealings with suppliers since that time.
“Coles conducts substantial training with all team members to ensure that its suppliers are treated in an open and fair manner. Furthermore, since 2011 Coles has taken substantial steps to improve its ways of working with suppliers.”
The ACCC is seeking pecuniary penalties, declarations, injunctions and costs, and the matter is listed for a directions hearing in on Friday 24 October in Melbourne.
