Leak about food suppliers was negotiating ploy: Coles

ANDREW MAIN
The Australian
April 03, 2013

RETAIL giant Coles has dismissed as “a negotiating strategy” the recent leaking to The Australian of an email sent to the group’s suppliers by Victor Simonovich, the Coles category manager for health foods.

Mr Simonovich’s note detailed a range of strict conditions that manufacturers must abide by, including paying for their own products to be removed from shelves, if they want to keep Coles as a customer. The message is part of a move by Coles to clear shelf space and launch a range of gluten-free products under Coles’s in-house brand.

Coles yesterday added that the leaked email did not reflect the entire contents of the message and “additionally, it fails to take into account conversations and negotiations had with the relevant suppliers to whom this email was sent”. “We’re not going to comment in detail about confidential discussions we have been having with suppliers,” a Coles spokesman said.

“Even if one supplier has decided they want to leak a letter as part of a negotiating strategy, we will not be drawn into a public discussion on the subject.”

The spokesman said the letters were part of an ongoing process and negotiations, “which are not yet finalised”.

The Australian Competition & Consumer Commission, meanwhile, declined to comment, despite the fact both Coles and Woolworths are under investigation for possibly misusing their market power to demand unsustainably low prices.

The spokesman referred to comments made by ACCC chairman Rod Sims to a Senate estimates hearing in February.

On February 13, Mr Sims told senators that since last October the ACCC had been investigating both Coles and Woolworths about “persistent demands for additional payments from suppliers, above and beyond that negotiated in their terms of trade” and “the imposition on suppliers of penalties that did not form part of any negotiated terms of trade, and which apparently do not relate to actual costs incurred by the major supermarket chains as a result of the conduct which has led to the penalty being imposed”.

Mr Sims also noted “threats to remove products from supermarket shelves or otherwise disadvantage suppliers if claims for extra payments or penalties are not paid . . . failure to pay prices agreed with suppliers” and “conduct discriminating in favour of homebrand products”.
He said at the February hearing that such behaviour, if proved, would be a breach of the law and that the ACCC was now investigating such claims.

Coles rejected the suggestion that suppliers must nominate a number of their own products to be removed from shelves in order to make way for Coles-branded goods. “Victor’s email is clear that the offer relates to branded lines, that is: ‘introduce any key branded lines on one-in, one-out basis’,” the spokesman said.

The spokesman said he had “also confirmed that Victor engaged with the three suppliers to whom the email was sent and that it was clear that terms were always negotiable”.