‘Profit Day’ beef for Coles: Supermarket giant accused of bullying small business suppliers

COLES allegedly set aside a “Perfect Profit Day” to bully small business suppliers into paying the gap when their products did not reach budgeted profits.

Moreland Council tweeted this photo of winds ripping metal from roof of Coles supermarket in Sydney Rd near Bell St in Coburg on June 24, 2014.

SUPERMARKET giant Coles allegedly set aside one day a year dubbed “Perfect Profit Day” to bully small business suppliers into paying the gap when their products did not reach budgeted profits.

The Australian Competition and Consumer Commission yesterday launched Federal Court action alleging Coles took advantage of its “superior bargaining position” to demand money from suppliers it was not entitled to.

It was alleged Coles requested money for “waste” and “markdowns” after Coles had accepted the goods.

Suppliers who baulked at paying the fees were allegedly threatened by measures that were “commercially detrimental’’ to them.

In emails obtained by the ACCC, one Coles manager described Super Profit Day as a “pot of gold’’.

Coles allegedly expected its suppliers to pay the difference between what the company budgeted a product to sell for and what it actually sold for.

The allegations related to 2010 and 2011.

In one instance, Oates Cleaning Products was allegedly told to pay more than $300,000 because that was what Coles allegedly deemed the profit gap to be.

ACCC chairman Rod Sims said the statement of claim lodged in the Federal Court was the result of an unprecedented investigation.

“A couple of years ago there was a cacophony of noise from the suppliers,” Mr Sims said.

“The Australian Food and Grocery Council came to us and said we had to do something about it.

“This is a matter of significant public interest involving allegations of unconscionable conduct by a large national company in its dealings with small business suppliers in the highly concentrated supermarket industry.’’

Mr Sims said the ACCC asked for proof but suppliers declined until they were offered the chance to raise allegations confidentially.

The information from 50 suppliers who came forward resulted in the ACCC invoking powers to seek information from Coles to build a claim against the supermarket giant for unconscionable conduct.

Coles yesterday strenuously denied the allegations.

“The ACCC’s allegations concern a limited number of dealings with five Coles suppliers three years ago,’’ the company said in a statement.

“For context, Coles has over 4000 suppliers, and is in contact with many of them on a daily basis. It has millions of individual contacts with suppliers every year.

The statement described the profit day as an administrative day: “This was an administrative day where discussions were held with suppliers.’’

The allegations come five months after the ACCC accused Coles of engaging in unconscionable conduct by using misleading information to force 200 smaller suppliers to pay extra rebates