May 5, 2014
The Queensland Dairyfarmers’ Organisation (QDO) has welcomed news that the Australian Competition and Consumer Commission is starting legal proceedings against Coles supermarkets for alleged unconscionable conduct.
It says that it is a further demonstration of the urgent need for action to shield the dairy industry from the impacts of the supermarket milk price war, which has been led by Coles supermarkets.
The ACCC announced today that it alleges that Coles “developed a strategy to improve its earnings by obtaining better trading terms from its suppliers. . .” with one way being “through the introduction of ongoing rebates to be paid by its suppliers in connection with the Coles Active Retail Collaboration (ARC) program”.
The ACCC alleges “that, in a number of cases, threats were made when suppliers declined to agree to pay the rebate”.
QDO President Brian Tessmann said the allegations would sound familiar to Queensland dairy farmers who had been raising similar concerns about the ruthless discounting of milk and the impact on the fresh milk value chain for more than three years.
“From day one, when Coles first slashed the price of its store-brand milk to $1 per litre on Australia Day 2011, QDO has been very vocal in our concerns that this discounting of milk was unfair and robbed the fresh milk value chain of sufficient value to be sustainable,” Mr Tessmann said.
“We have raised very serious concerns about unconscionable conduct, predatory pricing and loss-leader marketing tactics, where milk is priced so cheaply in order to not just attract customers to the back of the store, but also to grow the market share of their own brand at the express of proprietary brands and ultimately consumer choice.
“We found that Coles was unwilling to listen to our concerns, and even provided misleading information to the public in an attempt to justify its position.
“As just one example, we still have not been given an answer as to how milk could ever be sold in places such as Mount Isa or Darwin for $1 per litre without it being at a significant loss and damaging competition and consumer choice.”
Mr Tessmann acknowledged that the current proceedings from the ACCC were different to issues associated with alleged predatory pricing of milk, but they were still very serious allegations that need to be brought to justice.
He QDO was participating in a current Federal Government review of the Competition and Consumer Act but it was clear that urgent interim action was needed to restore fair market conditions and sustainable returns to the Queensland dairy industry.
“Queensland is short of milk across the year and we have lost almost 100 farmers from the industry since the milk war began,” he said.
“(The) industry is urgently calling for a Mandatory Code of Conduct and changes to strengthen the Competition and Consumer Act to put a stop to the damage being caused by the milk price war.”
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