Sunday, October 26, 2014

Coles held illegal 'profit day': ACCC

SUPERMARKET giant Coles held an annual "profit day" to illegally collect payments from suppliers, according to the consumer watchdog.

THE allegations are contained in Federal Court documents lodged by the Australian Competition and Consumer Commission in its second case brought against the retailer in six months.
The latest case involves accusations Coles engaged in unconscionable conduct and breaching consumer law in 2011.

Coles has rejected the allegations, and says it has since improved its ways of working with suppliers.

The ACCC's case will include emails from managers ordering lower management to chase food suppliers for money to meet profit gap budgets, on what was also called "perfect profit day".

That meant ordering suppliers to pay Coles to make up the difference if the retailer had not made enough of a profit on the suppliers' products.

Suppliers were also retrospectively penalised or fined when products Coles had already accepted were marked down or unsold, despite it being out of the control of suppliers, the ACCC says.

Coles will be accused of ending supply contracts if they did not comply, which led to the collapse of many suppliers, while others were too scared to complain to the ACCC.

The ACCC's previous case, brought in May, concerned Coles allegedly squeezing $16 million a year out of suppliers through the Active Retail Collaboration program.

The ACCC's latest action involves day to day dealings with suppliers.

Coles argues the ACCC's allegations concerned a limited number of its suppliers - only five of more than 4,000.

The "profit day" involved discussions aimed at ensuring suppliers delivered stock on time, as well as ending high levels of waste or the poor performance of products, which would contribute to higher prices for customers, Coles said.

ACCC chairman Rod Sims said not every supplier that complained was part of the legal action, because that would waste the court's time.

"The noise from the complaints was deafening," he told AAP.

"This has got nothing to do with prices at the supermarket at all, that's not right ... we allege this is about unfair shifting of profits from suppliers to Coles.

"This is a matter of significant public interest involving allegations of unconscionable conduct by a large national company in its dealings with small business suppliers in the highly concentrated supermarket industry."

The ACCC is seeking pecuniary penalties, declarations, injunctions and costs.

It is due to be heard in the Federal Court in Melbourne on October 24.

EXTRACTS FROM COLES EMAILS

" ... our profit position still well behind budget we now need to be chasing all suppliers for any profit gaps we have to sales" - business category manager Philip Reidy, Oct 5, 2011

"I want to get out of the Friday morning "panic" please. Our profit budget is a given .... ring suppliers today if you are short on profit." - business category manager Philip Armstrong, Nov 8 2011

"We have been set a target of money we need to secure as a team for the day, as this number is $750,000 which is just over $100,000 per category ... Let's aim to secure one million dollars for our profit day." - Mr Reidy, Nov 11 2011

Source: ACCC filing with Federal Court
new.com.au 16 Oct 2014

Let's see the results of the spineless ACCC being a corporation working the benefit of corprations and NOT consumers.

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