Metcash suppliers make accusations of unconscionable conduct

Posted by AFN Staff Writers on 9th February 2015
Metcash suppliers make accusations of unconscionable conduct
Metcash suppliers make accusations of unconscionable conduct

Australian wholesaler and distributor of groceries Metcash is facing accusations from one of its suppliers of unconscionable conduct.

It has been reported that COFCO Distributors and Fasttracker Logisitics, which are both owned by a group of Indonesian businessmen, have accused Metcash of using unfair tactics to extract more than $11 million in rebates and payments from the suppliers over the last six years.

Metcash’s brand portfolio includes IGA supermarkets, Mitre 10, Cellarbrations and Autobarn.

Statement of claim in Federal Court

Fairfax has reported that a statement of claim was lodged in the Federal Court in Sydney in December 2014. In the statement, COFCO said it had paid Metcash $10.36 million in rebates on sales of $39.24 million over the six years to 30 June 2014, and had been forced to pay $395,275 for “overseas study tours” for Metcash staff. The statement of claim said the rebates were “not reasonably necessary for the protection of the legitimate interests of the Metcash Group”.

Fasttrack Logistics claimed it had paid $1.35 million in rebates in six years on sales of $4 million. The pair also accused Metcash of failing to take delivery of about $1.5 million of groceries, leaving them out of pocket.

Metcash has declined to comment on the proceedings, saying only that it would defend the claims “vigorously”. Fairfax reported that it was understood Metcash has been in a long-running dispute with the owners of the two companies over issues unrelated to the rebates and payments.

The news of the accusations against Metcash come less than two months after Australian supermarket giant Coles agreed to settle unconscionable conduct claims. Australian Food News reported in December 2015 that Coles was set to refund payments made by certain suppliers, after the supermarket group admitted it engaged in unconscionable conduct when dealing with certain suppliers in 2011.

The action against Coles was initiated by the Australian Competition and Consumer Commission (ACCC). The ACCC commenced proceedings on 5 May 2014 (first proceedings) and 16 October 2014 (second proceedings) against Coles Supermarkets Australia Pty Ltd and Grocery Holdings Pty Ltd (together, Coles).

Metcash appoints new Chief Financial Officer

Meanwhile, Metcash has announced the appointment of a new Chief Financial Officer (CFO), Brad Soller.

Metcash said Mr Soller brings a wealth of corporate experience and acumen to the Metcash Executive team, most recently as Chief Financial Officer of David Jones, and prior to that as Group Chief Financial Officer of Lend Lease. Ian Morrice, CEO of Metcash Limited, said Mr Soller “has managed complex finance portfolios” and directed all aspects of the finance function including: corporate and statutory finance, business unit finance and support services, tax, treasury, investor relations, internal audit as well as strategy and planning.

At Lend Lease, Mr Soller held a number of senior financial positions in both Australia and the United Kingdom before being appointed Group Chief Financial Officer. His other senior financial roles have included Chief Financial Officer at BAA McArthur Glen Limited in the United Kingdom and Director of Finance at UK listed electrical retailer, Thorn plc. Mr Soller is a Chartered Accountant, having worked with PriceWaterhouseCoopers, and holds a Masters of Commerce and Bachelor degrees in Accounting and Commerce.

The news of Mr Soller’s appointment as CFO comes not long after Metcash announced a continued decline in profits, showing slow progress in Mr Morrice’s ‘transformation plan’ for the Company. Australian Food News reported in December 2014 that Metcash had announced a drop in its Underlying Profit after Tax of 9 per cent, to $101.7 million, which it said was due to “ongoing operating deleverage” and the commencement of its investment strategy for its Food and Grocery division.