Coles will pay an Australian dairy cooperative more than $5 million after an investigation by the Australian Competition and Consumer Commission.
The ACCC investigated allegations the supermarket giant failed to follow through on indications in March it would pass on to farmers the full benefit of a 10-cent-per litre price hike for its Coles-branded two and three litre milk.
Coles’ statements included: “An extra 10 cents per litre to Australian Dairy Farmers”, and, “Coles will pass the extra 10c per litre to processors who will distribute all of the money to the farmers who supply them with milk for Coles Brand”.
However the ACCC claims that when an unrelated 6.5-cent-per-litre increase commenced in April, Coles reduced payments to dairy company Norco Co-operative Limited under the retail price increase from 10 cents to 3.5 cents.
The ACCC believe this was an “egregious breach” of the Australian Consumer Law and had been prepared to take the company to court to allege misleading conduct, ACCC chair Rod Sims said on Thursday.
“Coles allowed farmers, consumers and the Australian public to believe that its 10 cpl price rise would go straight into the pockets of dairy farmers, when the ACCC alleges this was not the case for Norco farmers,” Sims said in a statement.
Coles has committed to pay an additional seven cents per litre for two and three-litre Coles-branded fresh milk, amounting to $5.25 million to Norco for milk supplied between April 2019 and June 2020.
“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.
The ACCC understands Coles passed on the 10 cents per litre increase to other dairy processors.
Coles in a statement on Thursday said it “respects the regulatory process but disagreed with the ACCC’s interpretation of these issues”.
Coles will pay Norco a $2.8 million lump sum to be distributed to farmers as well as a further seven cents per litre for two and three-litre Coles-brand milk produced by Norco until at least the end of the financial year.
