More court action against Woolworths

17/02/2016
Retailbiz.com.au
The Australian Competition and Commission (ACCC) is alleging “unconscionable conduct in all the circumstances” against Woolworths.
ACCC chairman Rod Sims has told the media that back in 2014, it claims Woolworths was pressuring more than 800 Woolies’ second-tier suppliers for $60 million to cover a gap between target profit and actual profit.
While many suppliers said no, the regulator said others paid, up to $18 million.
Woolworths has just received a hefty fine over dodgy products.
The former head of Kellogg Australia Jean-Yves Heude said the relationship between the Woolworths, Coles and suppliers changed when Wesfarmers took control of Coles in 2008.
“Before that, the way the industry was working was based on what I call the win-win model, where good relationships with people, long term relationships, not aggressive negotiation, was really the golden rule,” Heude said.
However, aggression towards suppliers became the rule when Wesfarmers recruited executives from Britain to run Coles, with tougher negotiations on industry staples, such as discounts.
“Pretty much now today 100% of the discount is paid by the manufacturer, but in 2008 and before, it was more split and shared,” Heude said.
Meanwhile, the new Food and Grocery Code of Conduct gives an idea as to the type of behaviours manufacturers have been subjected to.
Among the behaviours now banned by the code are:
Payments for shelf space
Payments for the right to be a supplier
Payments for in-store food spoilage
Payments for promotions
Payments for store refurbishments.
“You would not have the code had the action not been taken against Coles for unconscionable conduct. The two are completely linked,” Sims added.