Coles refunds $12 million to suppliers following ACCC action

The Australian Competition and Consumer Commission (ACCC) has welcomed a statement from independent arbiter, Jeff Kennett, instructing Coles to refund over $12 million to suppliers.

Last year, the Federal Court made declarations in two proceedings that Coles had engaged in unconscionable conduct in 2011 in the way it dealt with certain suppliers.

At the same time last year, Coles gave the ACCC an undertaking that it would establish a formal process to provide options for redress for over 200 suppliers, overseen by Jeff Kennett.

ACCC chairman, Rod Sims, said: “The arbitration process conducted by Mr Kennett has proven both extremely timely and effective with significant benefits to suppliers.”

Coles

Large number of suppliers accepted the relief offered by Coles

“The process will also deliver flow on effects for suppliers more broadly as a result of changes Mr Kennett says Coles has begun to implement that affect the way it deals with its suppliers,” Simms added.

Coles has allowed suppliers to exit the ARC (Active Retail Collaboration) program without penalty or to have their ARC contribution rebates reviewed. In addition to the refunded amounts paid by Coles, this action will result in further substantial savings for Coles’ suppliers.

“The high level feedback from suppliers is that they are largely satisfied with access to redress from Coles and the timely, efficient and low cost approach. Ultimately, it was a matter for each supplier to decide whether or not to proceed with the resolution proposed, and as Mr Kennett’s report demonstrates, a very large number accepted the relief offered by Coles,” Sims said.

“The arbitration process was intended to provide an efficient alternative to otherwise lengthy and costly processes in determining the loss and damage of affected suppliers.  Mr Kennett has now finalised his deliberations and has instructed Coles to refund over $12 million to a number of ‘Tier 3’ suppliers and a further $324,000 to suppliers listed in the claims proceedings. This is in addition to the penalty ordered by the court of $10 million,” he added.

Under the arbitration process, it was also open to suppliers to simply exit the ARC program. A number of suppliers took this option.

“Mr Kennett has reported that his arbitration process has resulted in substantial ongoing savings for suppliers. Exit from the program chosen by some suppliers and reduced rates for others will save suppliers significant additional costs into the future,” Mr Sims said.

“The ACCC recognises and acknowledges Coles’ co-operation in acting upon the binding determinations made by Mr Kennett and in making some of the non-binding changes recommended by Mr Kennett. It moved quickly and without challenge to accept the decisions and implement changes,” Sims said.

In addition to its role in enforcing the Code, the ACCC will continue to monitor developments in the supermarket sector and issues raised by suppliers, including under the provisions of the Australian Consumer Law.

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