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Following on from my article on Coca-Cola Amatil’s loss of market share in the Australian soft drink category over recent years, I was interested to read that Rod Sims, Chairman of the Australian Competition and Consumer Commission, has initiated unprecedented proceedings in the Federal Court against Coles after what it alleges is the unconscionable treatment of its suppliers.

The two-and-a-half year investigation by the ACCC includes allegations of:

  • 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 by suppliers; and
  • Conduct discriminating in favour of home brand products.

Wesfarmers Limited, Coles’ parent company, is yet to respond to these allegations despite the fact John Durkan, the soon-to-be boss of the Coles Supermarket chain, has been named in the court documents as playing a central role in the “orchestrated and organised campaign”.    

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564) and may contain general financial advice that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs.

One thought on "It comes with the supply chain"

  1. Coles…….and probably a few others! Welcome to the strange world of retail, were house brands compete with international brands on the same shelf. Yet [somehow] the house is expected to NOT use it’s immense home ground advantage['s]. i propose the internationals form a co-op, retailing their own mega brands only, the IPO wouldn’t interest me, but the long term ramifications of house-brands -vs- mega-brands intrigues me.

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