The Australian Competition and Consumer Commission has called on the Federal Court to hand Coles a penalty of over $5 million for misleading consumers over the freshness of its bread products, with independent supermarkets calling for an even bigger fine.
In June 2013, the ACCC commenced proceedings in the Federal Court against Coles, alleging the supermarket giant had engaged in false, misleading and deceptive conduct in regards to various Cuisine Royale and Coles Bakery branded bread products.
The ACCC claims Coles promoted its bread as “Baked Today, Sold Today” and “Freshly Baked In-Store” when the bread was actually partially baked and frozen in Ireland then transported to Coles stores and “finished” in store.
In September last year, Coles was slapped with a three-year ban on advertising its bread as being freshly baked.
In the latest twist in the case, Fairfax reports the ACCC called for a penalty of at least $4 million to $5 million over the Australian consumer law breaches during a penalty hearing in the Federal Court this week.
According to the report, Coles’ legal counsel responded by arguing against the idea it should be handed a large penalty because it is a large company.
But Jos de Bruin, chief executive of independent supermarkets association Master Grocers Australia, told SmartCompany a $5 million penalty is not enough for a major retailer such as Coles.
“For a multi-billion dollar company like Coles, it’s just a little slap on the wrist,” says de Bruin.
“They’ll most likely pay the fine because they know their reputation is worth far more than $5 million and so they’ll probably just pay the fine to get the legal action over with.”
While SmartCompany contacted a spokesperson from Coles, he would not comment on the matter citing ongoing legal proceedings.
However, in a statement issued at the start of proceedings, Coles said it would vigorously defend against the accusations.
“In talking to customers about the ‘par-baked’ bread range we certainly never set out to deliberately mislead anybody but we completely accept that we could have done a better job in explaining how the products are baked,” Coles said at the time.
A spokesperson for the ACCC told SmartCompany the watchdog would not comment until the judgment on penalties is made.
While not speaking directly about the case at hand, Small Business Minister Bruce Billson told SmartCompany “the government has provided more than $80 million in extra resources to the ACCC to ensure a competitive environment”.
“And that includes taking very seriously providence and quality claims so consumers aren’t ripped off,” Billson says.