Coles concedes supplier payments were illegal

Coles concedes supplier payments were illegal

Coles, Australia's second-largest retailer, has agreed to accept payments demanded from suppliers in 2011 constituted "unconscionable conduct" and said it will take part in an independent review to assess supplier refunds.

The grocer is facing two separate counts of legal action filed by the Australian Competition and Consumer Commission (ACCC). According to the ACCC, Coles broke Australian competition regulations by requesting payments through its "active retail collaboration" programme and by requiring payments from suppliers for purported profit gaps, waste and markdowns.

In a joint submission, the ACCC and Coles will today (15 December) ask Australia's Federal Court to grant consent orders to resolve the proceedings. The consent orders would be based on "admissions by Coles" that the group broke Australian law and will include "pecuniary penalties", the ACCC said. According to local reports, the retailer has agreed to pay fines totalling A$10m. 

"The parties will also advise the court that, as part of the resolution of the proceedings, Coles will give an enforceable undertaking to the ACCC which provides for an independent review of the eligibility of suppliers referred to in both proceedings for possible refund of certain payments made to Coles by those suppliers," the competition watchdog added.

The ACCC that it will now be up to the court to decide whether the consent orders should be granted. The competition regulator added that it would not comment further on legal proceedings. Coles was not immediately available for comment at time of press.