Coles has started compensating some suppliers
Grocery suppliers have already begun to receive compensation from Coles, following the Australian Competition and Consumer Commission’s legal action against the supermarket giant over its treatment of suppliers.
And the man tasked with overseeing the compensation process – former Victorian premier Jeff Kennett – says the end result will be “a better system” between supermarkets and their suppliers.
Coles appointed Kennett as an “independent arbiter” to resolve disputes between Coles and its suppliers in August 2014, following accusations it had forced suppliers to participate in a rebate program and court proceedings by the ACCC, which were initiated in May.
In October, the ACCC alleged Coles had engaged in unconscionable conduct against some suppliers in relation to payments for purported profit gaps, waste and markdowns and late and short deliveries.
Despite initially denying the allegations in the first claim, Coles settled the two separate claims of unconscionable conduct in December, admitting it had “crossed the line” and offering to compensate affected suppliers. Coles was fined $10 million by the Federal Court.
Speaking to Fairfax today, Kennett revealed several suppliers have already received compensation under the recently established Coles supplier charter.
While Kennett did not reveal who the suppliers were or how much compensation they have received, he said they include suppliers who were penalised for wastage or theft in Coles stores and suppliers who had their agreements cancelled shortly after their products reached Coles stores.
“For the majority of small businesses, that behaviour is just horrendous,” Kennett said.
“I have in the main settled in favour of the suppliers and passed my findings on to Coles, with any observations I’ve drawn from settling the matter, if it can lead to better practice.”
“Coles have accepted without argument my findings and they’ve paid the suppliers within days.”
According to Fairfax, Kennett has also written to more than 220 suppliers named in the ACCC’s first unconscionable conduct case against Coles, and five named in the second case, informing them of the supermarket’s undertakings to the ACCC and the Federal Court and the offer of compensation.
The ACCC had claimed Coles forced suppliers to take part in its ‘Active Retail Collaboration’ program, which required additional and ongoing rebates.
“The process is very much alive,” Kennett said.
“For about 53 (suppliers) it’s clear cut – they didn’t pay any rebates (under the ARC) so I don’t think they’ve got any claims. The other 150 need to have a look at what’s been agreed between Coles and the ACCC, make a decision and come back to me.”
“Every case will be judged on its merit.”
Andrew White, deputy chief executive of Australia’s peak body of vegetable growers, AUSVEG, told SmartCompany the process appears to be working well, with AUSVEG yet to hear about problems with the process from any of its members.
White says he does share Kennett’s optimism that the process will improve the way supermarkets interact with their suppliers, although AUSVEG will continue to monitor the issue.
“We cautiously welcomed it [Kennett’s appointment] in August,” White says.
“It’s an improvement that there is now a process in place to deal with disputes between Coles and suppliers.”
“We will continue to monitor it and there are still other avenues available to suppliers, including through the ACCC, if they wish to take advantage of them.”
White believes the ACCC’s action against Coles, and the supermarket’s response, will have a flow-on effect to other players in the grocery industry, saying it can “only be a good thing if the ACCC is saying ‘these are the rules and if you don’t adhere to them, there will be consequences’.”
Coles declined to comment to SmartCompany and Kennett failed to respond to a request for comment prior to publication.