Coles has fought back against the Australian Competition and Consumer Commission’s allegations that it threatened suppliers.
The ACCC launched proceedings in the Federal Court against Coles yesterday but the supermarket giant has rejected the competition watchdog’s claims of unconscionable conduct.
A spokesperson for Coles said the ACCC’s allegations concern a limited number of dealings with five Coles suppliers three years ago.
“Coles has over 4000 suppliers, and is in contact with many of them on a daily basis. It has millions of individual contacts with suppliers every year,” the spokesperson said in a statement.
“All five suppliers continue today to be valued suppliers to Coles.”
Coles says its negotiations with suppliers were part of “ongoing commercial negotiations” involving a much broader, longer-term trading relationship with each supplier.
“These are normal topics for business discussions between grocery suppliers and retailers in Australia and around the world,” the spokesperson says. “Commercial negotiations can be robust, regardless of the industry or sector.”
Coles also defended its “Profit Day” which it describes as “an administrative day where discussions were held with suppliers in relation to outstanding claims and additional business opportunities”.
Coles says discussions, including those concerning profit gaps, were aimed at improving the profitability of products which can limit the supermarket’s ability to deliver value to customers.
The supermarket also defended its actions against suppliers in relation to product wastage.
“Responsibility for waste may lie with the supplier, the retailer or it may be shared,” the spokesperson for Coles said.
“Payments for waste are a common business practice in retail in Australia and around the world.”
But Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany while only five suppliers may have been named in the legal action there are “a lot more” who have been pressured by Coles.
“People are very afraid to come out in public and say anything because they know that it is the end of their business,” he says.
“If you complain, they are going to punish you pretty severely.”
Strong says the five suppliers who have spoken out should be safe as the ACCC will be watching very closely.
Strong is calling for small businesses that have been stifled, or forced to give over their professionalism and innovation skills behind Coles and Woolworth labels, or just been bullied to contact COSBOA.
“This issue has been going on for years and it’s good to have someone who finally gets it,” Strong says.
“I really believe falling productivity in Australia is because people out there in the supply chain can’t innovate because they are under stress and under pressure.”
The latest proceedings come just five months after the ACCC accused Coles of forcing about 200 smaller suppliers to pay extra rebates.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
