UPDATE 21/10: The Transport Workers union has welcomed the deep look into Coles’ behaviour, but says that the ACCC needs to look at the way Coles treats its transport and logistics suppliers too.

“From the farm gate to Australia’s kitchen tables, Coles is a company driven by an insatiable hunger to maximise profit, regardless of the cost to suppliers, small business and families,” TWU assistant national secretary Michael Kaine says.

ORIGINAL: The ACCC is taking action against Coles, accusing it of “unconscionable conduct” in its treatment of suppliers.

The ACCC is chasing Coles on several serious allegations, including that the supermarket used intense pressure and threats to get payments from five suppliers, when markdowns or damage led Coles to lose money.

“The ACCC alleges that Coles took advantage of its superior bargaining position by demanding money from suppliers that it was not lawfully entitled to, and was, in all the circumstances, unconscionable,” chairman Rod Sims said

“The ACCC has commenced these proceedings because it considers the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers.”

The watchdog says that in 2011, Coles pursued its suppliers for “profit gaps” on goods - the difference between the amount of profit Coles had wanted to make on goods and the amount it actually achieved.

It also chased suppliers for amounts it claimed as “waste”, which occurred after Coles had accepted the goods, as well as price reductions, or “markdowns” implemented by Coles to clear goods.

The ACCC will allege that because both profit gaps and “waste and markdowns” were outside the control of suppliers, and that the amount of the fines Coles sought was unrelated to the value of the goods, or to any loss it might have suffered.

The ACCC alleges that Coles took advantage of its superior bargaining position by:

  • demanding agreements to pay money where it knew, or ought reasonably to have known that it had no legitimate basis for doing so;
  • failing to provide adequate information to suppliers to allow them to understand the basis upon which the demands were made;
  • applying undue pressure by, in some cases:
  • threatening measures that were commercially detrimental to the suppliers if they refused to agree to payments;
  • by pressing suppliers for urgent responses to agree to payments; or
  • by making multiple demands of suppliers for different types of payments;
  • withholding money due to suppliers and refusing to repay money when it knew it was not entitled to retain it.

The first hearing will be in Melbourne on October 24.