Coles slapped with $10m penalty for unconscionable conduct

Wednesday, 07 January, 2015

Coles has been ordered to pay $10 million plus costs after being found guilty of unconscionable conduct in its dealing with suppliers. The supermarket giant will also be forced to establish a formal process to provide redress for the more than 200 suppliers affected by its conduct.

The presiding judge, Justice Gordon, said that Coles’ behaviour was “serious, deliberate and repeated”. She said the company extracted payments from suppliers by threatening action if these suppliers did not comply with the payment demands, and also withheld money from suppliers.

“Coles’ practices, demands and threats were deliberate, orchestrated and relentless,” she said in her judgment.

“This is a very significant outcome for the supermarket sector and the business community in general. Indeed this is one of the first findings of unconscionable conduct in a business-to-business context under the Australian Consumer Law,” said Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims.

“Much more important is the magnitude of the penalties imposed and the recognition by the Court that Coles’ conduct in its dealings with suppliers was unconscionable and in contravention of the Australian Consumer Law. This should send a clear signal to larger businesses generally about appropriate business conduct in commercial dealings with smaller suppliers.”

Prior to Justice Gordon’s judgment, Coles had admitted to the unconscionable conduct and John Durkan, Coles’ managing director, stated that the company apologised unconditionally and accepted full responsibility for its actions.

The ACCC acknowledged Coles’ cooperation in resolving the proceedings and its willingness to make admissions and consent to Court orders.

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