Franklins claims court victory against Metcash but dispute lingers

Posted by Daniel Palmer on 17th December 2009

Franklins has claimed victory in a bitter contract dispute with grocery wholesaler Metcash, although confusion reigns as the end of a four-year legal battle nears.

Supermarket chain Franklins launched legal action against Metcash after its decision to end their supply agreement with the country’s third largest grocery player believing they were not receiving discounts and rebates they were entitled to.

And yesterday they were seemingly vindicated with the Court ruling in favour of Franklins in a complex case. The judgment noted that “in substance Franklins has succeeded on the appeal” while Metcash were required to pay their costs as they had “in substance … not succeeded on any issue”.

However, since the ruling was announced the tension between the two firms has risen, with both sides claiming a victory of sorts.

Aubrey Zelinsky, Managing director of Franklins, said – according to the Sydney Morning Herald– that the judgment was a ”clear vindication” of the supermarket chain’s assertion that Metcash had ”acted unlawfully … by failing to pass on agreed rebates, allowances and discounts” when supplying groceries to Franklins.

Metcash dismissed any implication of breaking the law and disputed claims by Franklins that the money owed would be a “very significant” amount.

“Metcash is firmly of the view that there will be no material financial consequences arising from the decision,” they said in a statement to the ASX this morning.

To read the findings of the Court of Appeal please click here.