Coles to resist ACCC push to merge unconscionable conduct cases
Australian supermarket giant Coles will resist moves by the Australian Competition and Consumer Commission (ACCC) to merge into a single court action the two unconscionable conduct court cases launched against the supermarket by the ACCC.
The Australian newspaper has reported that Coles would prefer to fight each court battle separately to give the supermarket a better chance of success, as well as protecting the reputation of its most senior executives.
Australian Food News reported earlier in October 2014 that the ACCC had initiated further action against Coles, with new allegations relating to Coles’ everyday interactions with its suppliers. Coles released a statement saying it rejected the claims of unconscionable conduct as alleged by the ACCC.
Coles said it was still working with all five suppliers named in the ACCC Statement Claim lodged in the Federal Court . The supermarket group said the individual communications with, and regarding, suppliers referred to in the ACCC’s Statement of Claim, “were part of ongoing commercial negotiations involving a much broader, longer-term trading relationship with each supplier”.
The first court proceedings initiated by the ACCC against Coles, which Australian Food News reported in May 2014, alleged that Coles had engaged in unconscionable conduct as part of its Active Retail Collaboration (ARC) program, in contravention of the Australian Consumer Law (ACL).
ACCC requests two cases be merged
The Australian reported that Coles is understood to be keen to keep the cases separate, especially as the second case only deals with allegations against five suppliers, whereas the first legal action cites alleged unconscionable conduct against 200 suppliers.
Additionally, the ACCC’s initial proceedings name current Coles boss John Durkan as a central player in attempts to allegedly extract up to $16 million from suppliers as part of Coles’ Active Retail Collaboration program, but the second case makes no mention of Mr Durkan.
At a directions hearing in the Federal Court in Melbourne on Friday, counsel for the ACCC, Norman O’Bryan SC, began his submission by requesting the two cases be joined into one action, according to The Australian newspaper.
Mr O’Bryan SC told judge Michelle Gordon that the two cases shared similar facts, witnesses and more than 600 pages of documents. It is also believed only one or two of the suppliers are named as alleged victims in both cases.
However, it was reported that Justice Gordon criticised the ACCC and Coles for not making the case simpler, saying she would not allow the twin cases to turn the Court into a “royal commission”.
The case continues in the Federal Court on Friday.
Chronology of the ACCC’s investigation
Media reports indicated that supermarket suppliers were being treated inappropriately by the major supermarket chains.
November 2011 – February 2012
The ACCC sought information from market participants about these concerns. But it became clear that suppliers were reluctant to speak to the ACCC for fear of what they perceived may be the consequences of providing information to the ACCC.
The ACCC Chairman called on suppliers to provide information to the ACCC on a confidential basis, on the basis that the ACCC would seek to protect and maintain that confidentiality.
The ACCC said the call from its Chairman in February 2012 resulted in around 50 market participants approaching the ACCC on a confidential basis to discuss practices by the major supermarket chains that they were concerned about. Having identified areas of concern, the ACCC then commenced an in-depth investigation into those issues.
13 February 2013
The ACCC provided an update to the Senate Estimates Committee of its investigations. The ACCC advised that the allegations raised with the ACCC, which were the subject of its investigation, included allegations of some conduct that the ACCC considered did not conform to acceptable business practice and may be unconscionable or a misuse of market power.
Such conduct, which was not necessarily identical across suppliers, product lines or even supermarkets, included:
- persistent demands for additional payments from suppliers, above and beyond that negotiated in their terms of trade;
- the imposition on suppliers of penalties that did not form part of any negotiated terms of trade, and which apparently do not relate to actual costs incurred by the major supermarket chains as a result of the conduct which has led to the penalty being imposed;
- threats to remove products from supermarket shelves or otherwise disadvantage suppliers if claims for extra payments or penalties are not paid;
- failure to pay prices agreed with suppliers; and
- conduct discriminating in favour of home brand products.
June 2012 – December 2013
Extensive in-depth investigation using compulsory information gathering powers that required suppliers and Coles to provide information.
The ACCC initiates proceedings against Coles in the Federal Court, alleging that Coles had engaged in unconscionable conduct as part of its Active Retail Collaboration (ARC) program, in contravention of the Australian Consumer Law (ACL).
The ACCC initiates further action against Coles, with new allegations relating to Coles’ everyday interactions with its suppliers. Coles releases a statement saying it rejected the claims of unconscionable conduct as alleged by the ACCC.
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