Coles ordered to pay $10 million in overcharging saga

By AdNews | 22 December 2014

The federal court has ordered Coles to pay $10 million in penalties for “unconscionable conduct” in what is being called “serious, deliberate and repeated” misconduct.

The supermarket giant was taken to the federal court after suppliers lodged overcharging and misconduct complaints with the ACCC. 

It is also thought the pay out figure could be closer to $11.25 million when court costs are added.

Under the ruling Coles will also enter a court enforceable undertaking to the ACCC to establish a formal process to provide options for redress for more than 200 suppliers referred to in the proceedings.

In her judgement, Justice Gordon said Coles' conduct merited "severe penalty".

“Coles' misconduct was serious, deliberate and repeated,” Gordon said.

“Coles misused its bargaining power. Its conduct was 'not done in good conscience. It was contrary to conscience. Coles treated its suppliers in a manner not consistent with acceptable business and social standards which apply to commercial dealings.”

The proceedings emerged over Coles' conduct against suppliers in late 2010 and 2011. The two main claims relate to a supply chain program and late delivery claims.

The supply chain program complaint was lodged by several suppliers who said they were being overcharged by Coles for access to the Coles supplier portal. This portal allows access to collaborative planning and greater data sharing capability and while Coles said it was right to charge for access, that it not transparent in its dealings and used its scale power unfairly.

A second claim related to communication and negotiations over the same period with a number of suppliers about the failure to deliver products, and wastage.

ACCC chairman Rod Sims called the ruling a clear signal to large businesses about appropriate conduct in dealings with smaller suppliers.

“This is a very significant outcome for the supermarket sector and the business community in general,” Sims said.
“Indeed this is one of the first finding of unconscionable conduct in a business-to-business context under the Australian consumer law.”

Sims also said the court ruling followed the ACCC's long-running investigation into supplier complaints in the supermarket sector.

“This investigation was commenced after the ACCC urged suppliers to come forward to the ACCC in confidence to report their concerns about dealings with the major supermarket chains; the court outcome has vindicated that approach.”

For more news:

ACCC investigates Woolies over supplier allegations

Coles crosses a line by 'overcharging' suppliers

Telstra rapped by the ACCC for misleading iPhone ads

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