Coles 'the biggest winner’ after $12m fine for conduct with suppliers

By RJ Whitehead

- Last updated on GMT

Arbiter Jeff Kennett sees a positive future for the industry following his decision
Arbiter Jeff Kennett sees a positive future for the industry following his decision

Related tags Supermarket

The Australian food industry backed a decision to compel Coles, the supermarket chain, to pay A$12m (US$9.1m) to suppliers, who can now leave Coles’s supply chain programme without penalty.

The arbitration and refunds arose out of the resolution of two proceedings begun by the Australian Competition and Consumer Commission (ACCC), the consumer regulator, against Coles in 2014. 

In December, the Federal Court made declarations in both proceedings by consent that Coles had engaged in unconscionable conduct in its dealings with certain suppliers.

New engagement with suppliers

Gary Dawson, chief executive of the Australian Food and Grocery Council (AFGC), said that the arbitration process, conducted by Jeff Kennett, the former Victorian premier, along with a recent decision by Coles to sign up to the AFGC’s code of conduct, demonstrated improvements in the way in which the supermarket is engaging with its suppliers.

These are important and positive changes being made by Coles. We have certainly encouraged suppliers who feel they have been poorly treated by Coles to take the opportunity of raising their concerns with Mr Kennett​,” said Dawson. 

While not everyone who has been through the Kennett review is happy with the outcome, most have acknowledged it is a genuine process aimed at resolving disputes and awarding compensation​.”

Dawson highlighted that the arbitration process is open to any of the thousands of suppliers dealing with Coles, not just the 200 businesses named in the ACCC action.

The grocery code, over which the ACCC will have ongoing oversight, establishes principles that relate to key aspects of trading relationships between retailers and suppliers—something Dawson and the AFGC hope will “provide greater certainty and clarity about dealings in the industry without adding unnecessary complexity or cost​”.

The high level of interest by the ACCC in the sector has been important for the development of a meaningful code and we acknowledge their ongoing interest​,” added Dawson.

Exciting future for the ex-premier

Rod Sims, ACCC chairman, applauded the arbitration process and echoed the AGFC’s view when he said: “The arbitration process… has proven both extremely timely and effective with significant benefits to suppliers​.

The process will also deliver flow-on effects for suppliers more broadly as a result of changes… Coles has begun to implement that affect the way it deals with its suppliers​.”

Speaking after his decision was made public, Kennett hinted it could also be a watershed for relations between supermarkets and suppliers.

"I'm really quite excited about what the future holds​," he said in one interview.

"The ACCC's involvement in this has been good for the suppliers but the biggest winner is Coles, because it's been forced to move to a more modern way of dealing with those they need most—the suppliers​.”

Related topics Policy Oceania Industry growth

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