Coles hit with $2.5 million fine for fresh bread claims; Business confidence rises but still weak: Midday Roundup
Friday, April 10, 2015/
Coles has been hit with $2.5 million in penalties for falsely claiming its bread was “baked today” and made in-store.
The fine, which was handed down by the Federal Court this morning, comes after the supermarket giant was banned from advertising its bread as freshly baked or baked on the day it is sold for three years.
Imposing the penalty, chief justice James Allsop said Coles’ actions had the “significant potential to mislead or deceive” consumers and competitors.
“The contravening conduct in this case is substantial and serious,” he said.
“The evidence before the court showed that Coles had engaged in the campaign with the clear purpose of improving its market share vis-à-vis its competitors, being bakeries such as Bakers Delight … It set out to do so by engaging in the conduct that, in fact, breached the Australian Consumer Law.”
ACCC chairman Rod Sims said in a statement the penalty sends “a strong message” to companies who deliberately choose to mislead consumers.
“As the Chief Justice pointed out, it is important that sellers in the market recognise that consumers are entitled to reliable, truthful and accurate information,” Sims said.
“The ACCC took this action because it was concerned that Coles’ ‘Baked Today, Sold Today’ and ‘Freshly Baked In-Store’ claims about its par baked bread were likely to mislead consumers. The conduct also placed independently-owned and franchised bakeries that entirely bake bread from scratch each day at a competitive disadvantage.”
Business confidence rises but still weak
The Reserve Bank of Australia’s decision to cut the cash rate in February may have bolstered business confidence in March, but the improved outlook still remains in fragile territory, according to the latest Roy Morgan poll.
Roy Morgan Research’s Business Confidence results for March showed an improvement of 6.3% (6.7 points) to 112.4 points on February’s outlook. But confidence remains below both pre-federal election levels and the average for the last four years.
While economic attitudes showed an improvement across the board, the March result stemmed mainly from an increase in the proportion of businesses that believe the next 12 months would be a good time to invest in growing their business.
“The proportion of those who believe it will be a good time to increase investment is at its highest level for 2015 so far,” said Norman Morris, industry communications director at Roy Morgan Research.
“The drop in the official cash rate by the RBA in February may have positively impacted on businesses’ plans to borrow, but this could easily be negated by strong economic head winds,” he added in a statement.
Morris said the economic factors still dampening business confidence include the drop in iron ore price, difficulties getting budget measures through the Senate, uncertainty around tax reform and the May budget and other international factors.
Shares up on open
Aussie shares are trading slightly higher heading into lunchtime, off the back of positive gains from US markets.
Chief market analyst at CMC Markets, Ric Spooner, said in a statement there was nothing overnight in market news likely to change the outlook for Australian investors this morning.
“This suggests that while the market may open on a firm note, the most likely scenario for today’s trading is another day of consolidation,” he said.
“In the last two days, the ASX 200 index has traded inside last Tuesday’s range and seems likely to remain there today. A potential assault on the 6000 high will be left to next week.”
The S&P/ASX 200 benchmark was up 18.3 points to 5950.5 points at 12.04pm AEST. On Thursday, the Dow Jones closed 56.22 points higher, up 0.31% to 17,958.73 points.