Coles warns buyers over unfair treatment of suppliers

Posted by AFN Staff Writers on 14th December 2011

Coles Supermarket Group has issued guidelines to the buyers that it employs on ways to avoid engaging in conduct that might be considered ‘unconscionable’ in dealings when negotiating prices with suppliers to Coles.

The supermarket chain has sent a document to all of its buyers offering examples of unconscionable behavior and negotiating practices that might be said to infringe the Australian Competition and Consumer Commission Act 2010.

This legislation is enforceable by the Australian Competition and Consumer Commission (ACCC), which has recently warned that it is watching for abuses of market power by the major supermarket groups.

A spokesperson for the Coles Supermarket Group told Australian Food News today that the “internal trading document” was part of Coles’ ongoing training.

The spokesperson said, “It is to make sure Coles’ team is trained in dealing with the suppliers appropriately. This is something you would expect any responsible business to do – it represents good corporate governance.”

According to the Australian Competition and Consumer Commission (ACCC), unconscionable conduct refers to circumstances in which:

  • one party to a transaction suffered from a special disability or disadvantage in dealing with the other party,
  • the disability was sufficiently evident to the stronger party,
  • the stronger party takes unfair advantage of its superior position or bargaining power to obtain a beneficial bargain.

In November 2011, Coles faced criticism over its ‘Active Retail Collaboration’ supply chain scheme, which some claimed constitutes uncompetitive behaviour.

In October 2011, the Australian Competition and Consumer Commission (ACCC) Chairman, Rod Sims, said the ACCC’s ability to control the misuse of market power by Australia’s leading supermarkets is something that it “really needs to test”.