It comes with the supply chain

It comes with the supply chain

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”.    

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Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only 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 and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.