Argues supplier payments were not used for profit hole.
Woolworths has defended its Mind the Gap program, which demanded up to $60 million in payments from suppliers, as a “reasonable and common business practice”. Being questioned on the stand was former Woolworths commercial director, Alex Dower, who reportedly acknowledged his staff had developed the scheme.
Asked whether Woolworths had a contractual right or a legal right to instigate the payment, he answered no. “So the payments were effectively gifts from suppliers?” ACCC senior counsel Norman O’Bryan reportedly asked, with Dower responding: “No, absolutely not, they were not gifts”.
Dower argued that the payments were used to cover management, store and labour costs, and promotion, not put in to the company’s profit shortfall, according to media reports.
Woolworths’ lawyers argue that the payments were entirely normal for suppliers to keep their product lines stocked at Woolworths.
During cross examination, O’Bryan reportedly put it to Dower that, “Mind the Gap was a flagrant breach of Woolworths’ own trading policy. Do you agree?”
“No I don’t agree. Not unconscionable conduct, just normal business,” Dower responded.
Woolworths’ lawyers argue the ACCC case ignores common business practice of negotiations between retailers and suppliers, not just via emails, but also telephone and face to face meetings, according to media reports.
The ACCC is seeking a full refund from Woolworths of $18 million to all 820 suppliers, in addition to a fine. The case is due to continue until Thursday.