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Join today and you can easily save your favourite articles, join in the conversation and comment, plus select which news your want direct to your inbox. The Australian Competition and Consumer Commission has this morning launched legal proceedings against Coles over its alleged treatment of suppliers, in an action that will send shockwaves through the supermarket and grocery sectors. The competition watchdog alleged that the nationa€™s second biggest supermarket chain engaged in unconscionable conduct in relation to its Active Retail Collaboration (ARC) program, in contravention of the Australian Consumer Law.The ACCC has alleged that in 2011, Coles developed a strategy to improve its earnings by obtaining better trading terms from its suppliers.

Colesa€™ target, the ACCC claims, was to obtain $16 million in ARC rebates from smaller suppliers.a€?a€™Coles was ultimately seeking an ongoing ARC rebate in the form of a percentage of the price it paid for the Suppliera€™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 a€?economic order quantitiesa€™,a€? the ACCC said in a statement this morning. 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.a€?a€™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. It is alleged that one of the ways Coles sought to improve its earnings was through the introduction of ongoing rebates to be paid by its suppliers in connection with the Coles ARC program, based on purported benefits to large and small suppliers that Coles asserted had resulted from changes Coles had made to its supply chain.

If this conduct is established in court, the ACCC expects that the community will share the ACCCa€™s view that business should not be conducted in this way in Australia,a€? Mr Sims said.a€?When we called for market participants to provide information to the ACCC on a confidential basis to assist the ACCCa€™s investigation, I committed that the ACCC would seek to maintain that confidentiality.

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