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The Australian Competition and Consumer Commission (ACCC) has welcomed a statement today from independent arbiter Jeff Kennett instructing Coles to refund over $12 million to suppliers following two proceedings commenced by the ACCC against Coles last year.Kennett has also allowed suppliers to exit the Active Retail Collaboration (ARC) program without penalty or have their ARC contribution rebates reviewed.
The Federal Court last year made declarations in the two proceedings by consent that Coles had engaged in unconscionable conduct in 2011 in its dealings with certain suppliers.
Coles, as part of the proceedings’ resolution, provided a court enforceable undertaking to the ACCC to establish a formal process to provide options for redress for over 200 suppliers, with Kennett appointed to administer the process.
“The arbitration process conducted by Mr Kennett has proven both extremely timely and effective, with significant benefits to suppliers,” ACCC chairman Rod Sims commented.
“The process will also deliver flow-on effects for suppliers more broadly as a result of changes Mr Kennett says Coles has begun to implement that affect the way it deals with its suppliers.”
Kennett was appointed to assess the eligibility of suppliers listed in the ARC proceedings to obtain refunds of any prior ARC rebate payments and seek adjustments of future rebates.
“The high level feedback from suppliers is that they are largely satisfied with access to redress from Coles and the timely, efficient and low-cost approach,” Sims stated.
“Ultimately, it was a matter for each supplier to decide whether or not to proceed with the resolution proposed, and as Mr Kennett’s report demonstrates, a very large number accepted the relief offered by Coles.”
Sims noted the intention of the arbitration process was “to provide an efficient alternative to otherwise lengthy and costly processes in determining the loss and damage of affected suppliers”.
“Mr Kennett has now finalised his deliberations and has instructed Coles to refund over $12 million to a number of ‘Tier 3’ suppliers and a further $324,000 to suppliers listed in the claims proceedings,” he commented. “This is in addition to the penalty ordered by the court of $10 million.”
A number of suppliers took the option to exit the ARC program, while suppliers who sought a review of their eligibility for refunds also had the option to exit the program.
“Mr Kennett has reported that his arbitration process has resulted in substantial ongoing savings for suppliers,” Sims stated. “Exit from the program chosen by some suppliers and reduced rates for others will save suppliers significant additional costs into the future.”
Sims stated that the ACCC “recognises and acknowledges” the cooperation of Coles in acting upon the binding determinations made by Kennett and in making some of the non-binding changes recommended.
The ACCC stated that it has been advised by Coles that it intends to become a signatory to the Food and Grocery Code from July 1, 2015.
