Coles to refund suppliers, The Australian

The ruling follows an eight-month process after Mr Kennett was installed as an independent arbiter in December last year to rule in a Federal Court dispute between the Australian Competition & Consumer Commission and Coles.

Coles has agreed to refund more than $12 million to suppliers and allow them to escape from the supermarket chain's retail program after an independent finding by former Victorian premier Jeff Kennett that the company engaged in unconscionable conduct.

The ruling follows an eight-month process after Mr Kennett was installed as an independent arbiter in December last year to rule in a Federal Court dispute between the Australian Competition & Consumer Commission and Coles. It follows a decision last December for Coles to settle two cases of unconscionable conduct with the ACCC for $10m.

The arbitration focused on the behaviour of Coles towards suppliers involved in the "Active Retail Collaboration" scheme, which the ACCC argued constituted unconscionable conduct. Coles was accused of making upfront claims of 1 per cent of revenue from suppliers as well as profit gap demands.

Following the arbitration it was agreed that 200 smaller suppliers would be entitled to payments worth $12m. Another group of suppliers would be in line for payments worth $324,000 who were previously listed in claims proceedings.

"The arbitration process conducted by Mr Kennett was an effective and efficient process with significant benefits to suppliers," ACCC chairman Rod Sims told The Australian. "It also shows there are other ways to do these things." Suppliers now have the choice to exit the program and be compensated or maintain their position in ARC for a reduced price, a finding that would be worth "a significant amount of money" according to Mr Sims.

"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," Mr Sims said. "A very large number (of suppliers) accepted the relief offered by Coles." In a statement Coles said it "accepts and respects" the decision and welcomed Mr Kennett's role in reviewing the treatment of suppliers.

"In addition to the arbitration process, Coles has taken many steps since 2011 to improve its relationship with our thousands of suppliers and help them grow," it said. "Coles has also implemented a best-practice compliance framework to ensure that it treats suppliers in an open and fair manner, and has been a leading advocate of the Food and Grocery Code of Conduct, to which we are pleased to become a signatory following its recent ratification."