Coles admits to crossing the line with suppliers in ACCC suit

COLES has confessed that it ‘crossed the line’ and admitted to ‘unconscionable behaviour’. And now it has to pay up.

26/07/2010 BUSINESS: Shoppers look through the produce at a Coles supermarket in Perth, Australia, on Monday, July 26, 2010. Wesfarmers Ltd., Australia's second-largest retailer, said sales at its Coles unit rose in the fourth quarter as the division's convenience stores and revamped fresh food areas in supermarkets drew more customers. Photographer: Tony Ashby/Bloomberg

SUPERMARKET giant Coles has apologised and offered refunds to suppliers after admitting it crossed the line with many of them.

Coles has agreed to make a legal settlement with the competition watchdog in which it admits to unconscionable conduct involving suppliers that breaches consumer law.

Suppliers will be eligible for refunds from Coles.

The ACCC is seeking penalties of $10 million from Coles.

The ACCC took legal action against Coles earlier in 2014, with the watchdog accusing the supermarket of unconscionable conduct over the way it sought rebates from suppliers.

It also alleged Coles had engaged in unconscionable conduct against certain suppliers in relation to claims for various payments, including payments for purported profit gaps, waste and markdowns, and late and short deliveries.

Coles initially rejected the allegations, but on Monday offered a dramatic turnaround in its position as it sought to settle the case with the ACCC in the Federal Court.

Former Victorian Premier Jeff Kennett will be an independent arbiter.

“Coles unconditionally apologises and accepts full responsibility for its actions in these supplier dealings,” managing director John Durkan said in a statement.

“Coles crossed the line and regrettably treated these suppliers in a manner inconsistent with acceptable business practice.

“ACCC chairman Rod Sims said at the time of launching this action ‘the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers.’ In the dealings we have identified, I believe that statement is appropriate.” The case is being heard by judge Michelle Gordon, who will decide whether to allow the settlement.

However she has questioned whether the penalties go far enough and will leave suppliers better off if their commercial relationship with Coles ends, with threats of commercial consequences forming part of the charges against Coles.

Former Victorian premier Jeff Kennett will act as an independent arbiter and decide whether suppliers should be refunded by Coles.