Supermarket giant Coles has admitted to breaking consumer law and apologised for unconscionable conduct in its treatment of suppliers. The company and the Australian Competition and Consumer Commission (ACCC) appeared in federal court on Monday to propose a settlement, under which Coles would pay $10 million in fines and establish a process for suppliers to seek refunds for improper payments.
The ACCC launched two legal cases against Coles earlier this year, accusing the chain of unconscionable conduct. The proposed penalties cover 15 separate transgressions. ACCC lawyer Norman O'Bryan outlined instances where Coles pressured suppliers for payments to fill so-called 'profit gaps', threatening to stop buying or promoting products if suppliers did not cover losses from waste, including shoplifting, markdowns, and late or short deliveries.
Justice Michelle Gordon noted that Coles increased its profit at the expense of smaller companies. The treatment of Benny's Confectionery was described as particularly egregious, attracting the largest proposed penalty of $1.2 million. Coles had initially denied wrongdoing when the second round of charges was filed, but reversed its stance on Monday.
Managing director John Durkan issued an unconditional apology, stating, 'Coles crossed the line and regrettably treated these suppliers in a manner inconsistent with acceptable business practice.' The refund process will be overseen by former Victorian premier Jeff Kennett, appointed as an 'independent arbiter'. Justice Gordon expressed doubts about whether the penalties were sufficient and questioned whether suppliers seeking refunds could be excluded from Coles' Active Retail Collaboration scheme. A decision on the settlement could be made on Tuesday.
