Coles Waves The White Flag To Suppliers

Australian supermarket giant Coles is emerging as an example of the consequences of supplier mistreatment as the chain received penalties for earlier conduct – and as supermarkets around the globe are being scrutinized for their business practices with small supplier partners.

Reports published Tuesday (June 30) said Coles will refund more than $12 million to its small suppliers, payments that will be made in addition to a $10 million fine issued by a court after the grocery giant was found to have squeezed the small businesses for funds.

“As can be seen from my decision to refund over $12 million, Coles had in 2011 clearly engaged in some behavior that I found unacceptable,” said independent arbiter Jeff Kennett in a statement, though he added that since 2011 Coles has made significant strides in improving relations with suppliers.

The sanctions stem from Coles’ alleged mistreatment of suppliers following the implementation of its ARC supply chain program. According to reports, the corporation demanded payments from its suppliers that the court found to be unfair. An additional $324,000 will be refunded to suppliers involved in a separate dispute following allegations Coles charged them to fill profit gaps.

Kennett’s ruling follows the $10 million fine issued to the company last December after a federal court found that the company unfairly demanded payment from suppliers and threatened to harm those suppliers if they did not comply, reports said.

Still, Kennett added that not all of the claims against Coles were founded. Coles has allowed suppliers to exit its supplier program without penalty.

The Australian Competition and Consumer Commission said the fines and sanctions are a win for suppliers across the nation. “Exit from the program chosen by some suppliers and reduced rates for others will save suppliers significant additional costs into the future,” said ACCC Chairman Rod Sims.