December 17, 2014
The Queensland Dairyfarmers’ Organisation (QDO) says an admission this week from Coles that it had mistreated suppliers was a signal that the Federal Government should strengthen Competition Law to outlaw predatory conduct.
The ACCC took legal action against Coles accusing the supermarket of unconscionable conduct over the way it sought rebates and various payments from suppliers.
Coles initially rejected the allegations but on Monday sought to settle the case with the ACCC in the Federal Court.
“Coles unconditionally apologises and accepts full responsibility for its actions,” managing director John Durkan said in a statement.
“Coles crossed the line and regrettably treated these suppliers in a manner inconsistent with acceptable business practice.”:
The ACCC is seeking penalties of $10 million.
QDO President Brian Tessmann said the announcement from Mr Durkan was in stark contrast to the evidence that Coles had presented to the 2011 Senate inquiry into milk pricing, along with other public statements that followed Coles’ move to reduce the price of its store brand milk to $1 per litre.
“Almost four years down the track and now following ACCC investigations and legal action, Coles has made the admission that it treated some suppliers unfairly and sought payments to fill ‘profit gaps’,” Mr Tessmann said.
“It raises serious questions. It is clear that what goes on behind closed doors in these negotiations is ugly.
“It is also a clear signal that the Federal Government needs to step up and strengthen the Competition Law to outlaw predatory conduct, to give the ACCC more power and the resources it needs to deal with these issues in a more timely manner, as well as introducing a Mandatory Code of Conduct covering the whole supply chain overseen by an ombudsman.
“This is a red flag when it comes to treatment of supply chains beyond the supermarket. It is now time for Coles to spell out a true and detailed response around milk prices and its treatment of the fresh milk value chain.”
Mr Tessmann said the fallout from the supermarket milk price war was severe, with the Queensland industry dropping from almost 600 dairy farmers in 2011 to just 456 today.
Queensland has also been left short of milk to meet local fresh milk demand for the past three years.
“Since 2011, Coles executives have continued to attempt to spin that cheap milk was not impacting the dairy industry. The black and white evidence clearly says otherwise,” Mr Tessmann said.
He said this “and other unconscionable conduct” had caused huge damage to supply chains and for fresh milk alone had caused hundreds of millions of dollars of impacts.
