Coles To Pay $5.25 Million To Dairy Farmers After ACCC Investigation
The Australian Competition and Consumer Commission has alleged Coles failed to pass on the full 10 cents price rise to Norco dairy farmers.
In March, the supermarket giant announced it would be increasing the price of its two and three litre Coles Brand fresh milk, with the extra money being passed on to farmers.
"The extra money will support Australia's dairy farmers who support Coles Brand milk to our customers," Coles said in a Facebook post at the time.
"Coles supports a sustainable dairy industry, and we are continuing to explore long-term options with the government and dairy industry to explore that."
But an investigation by the ACCC found after April 1, Coles reduced its payments to Norco dairy farmers from 10 cents per litre to 3.5 cents, despite an unrelated increase of 6.5 cents of cost to customers.
"The ACCC had been investigating allegations that, in a media release, social media posts and in-store signage, Coles represented that the full benefit of the 10 cpl retail price increase of its Coles branded 2 litre and 3 litre milk announced on 19 March 2019, would be passed on to farmers," ACCC said in a statement.
Coles committed in writing it would pay a lump sum to Norco farmers within seven days of the seven cents per litre rise between April 1 and December 1.
It would then continue to pass on the additional 7 cents to Norco farmers from December 1 until at least June 30, 2020.
This equates to around $5.25 million, and is more than the 6.5 cents which the ACCC alleges was not passed on.
“We were fully prepared to take Coles to court over what we believe was an egregious breach of the Australian Consumer Law. We believe we had a strong case to allege misleading conduct by Coles,” ACCC Chair Rod Sims said.
“Accepting this commitment means that farmers will receive additional payments from Coles, with the majority of the money to be paid to Norco within seven days.”
Sims said Coles advertising and media releases led the Australian public to believe the price increase would go straight into the pockets of farmers.
"The ACCC alleges this was not the case for Norco farmers,” Sims said.
“We take commitments made to us very seriously. The ACCC will be keeping a very close eye on Coles to ensure they follow through on this commitment, and we are not ruling out future litigation if necessary."
Coles had told 10 daily in a statement that it disagreed with the ACCC's interpretation of the issue but had agreed to the payout to provide immediate support to the farmers.
"Instead, in order to avoid an unnecessary dispute and provide immediate much-needed support to Norco farmers dealing with the ongoing impact of drought and bushfires, Coles proposed the investment of an additional 7c per litre for 2L and 3L Coles Brand milk purchased from Norco between April 1 this year and at least the end of June 2020," it said.
"This is on top of the 10c per litre on 2L and 3L Coles Brand milk that Coles has been paying since March."
Coles said it is "pleased" to be able to provide support to Australian dairy farmers while it continues to work with industry and government stakeholders to find long-term solutions for the sustainability of the Australia dairy industry.