‘Today’s action by the Australian Competition and Consumer Commission (ACCC) to initiate legal proceedings against Coles over its alleged treatment of suppliers should give small business owners around the country some degree of comfort’, said Robert Mallett CEO of the Tasmanian Small Business Council in Hobart Today.

‘The competition watchdog has, for many years, been accused as a relatively toothless tiger when it has come to genuinely supporting small businesses when the going gets tough but today it appears that the corner has been turned.’

The charge under which the action is being taken is section 22 of the Australian Consumer Law which deals with unconscionable conduct. As described on the ACCC website “unconscionable conduct does not have a precise legal definition as it is a concept that has been developed on a case-by-case basis by courts over time. Nevertheless, unconscionable conduct is generally accepted to mean conduct which should not be done in good conscience. Unconscionable conduct is more than simply unfair or harsh – it must have an element of bad conscience”.

In the statement by the ACCC “Coles’ target was to obtain $16 million in Active Retail Collaboration (ARC) rebates from smaller suppliers. Coles was ultimately seeking an ongoing ARC rebate in the form of a percentage of the price it paid for the Supplier’s grocery products, which, for its smaller suppliers, was the sum of a percentage which Coles asserted was referable to the value to the supplier of being able to access the Coles supplier portal and, where applicable, a percentage based on the asserted value to the supplier for Coles having changed its ordering patterns to order products in “economic order quantities”.

The ACCC alleges that in relation to 200 of its smaller suppliers, Coles required agreement by the supplier to the rebate within a matter of days. If these suppliers declined to agree to pay the rebate, Coles personnel were allegedly instructed to escalate the matter to more senior staff, and to threaten commercial consequences if the supplier did not agree.

‘Whilst this will take some months to be resolved, the ACCC should be applauded for having the courage to take on such a huge opponent on behalf of small suppliers to one of
the duopoly grocery suppliers in Australia’, said Mr Mallett.