The ACCC has commenced proceedings against Coles for alleged unconscionable conduct towards its suppliers.
A while back, Coles invited hundreds of its suppliers to sign up to its Active Retail Collaboration supply chain scheme under which rebates would be paid to Coles in exchange for benefits to be gained from improvements in the supply chain.
It wasn't long before suppliers began complaining that the program was far from collaborative and seemed more like a plan by Coles to rort the smaller players on prices.
The ACCC stepped in and saw it as a golden opportunity to test out the unconscionability provisions of the Australian Consumer Law. Historically, unconscionable conduct has been as tough as nails to prove since you pretty much have to show that the conduct was as nasty as say Solange Knowles’ vicious elevator attack on Jay Z (we watched the footage this morning – cray). However last year’s Federal Court decision in the Lux matter set the bar at a much more achievable standard being conduct that’s unfair in light of community standards and what you’d ordinarily consider to be fair game in a given scenario.
The ACCC's strategy is pretty clear. A misuse of market power claim can take up to a decade’s worth of time and millions in legal costs with small prospects of victory, given how reluctant the courts have been to find that a company has taken advantage of its market power. Unconscionable conduct on the other hand might be a much neater way to corner the heavyweights on anti-competitive behaviour.
We haven’t made our mind up on how this will pan out. There are more than 200 suppliers involved and proving a company’s unconscionability towards another company sounds a bit trickier than proving a corporation’s bullying of a lay consumer. Still, it shows creativity and we can only commend the ACCC for having a go at a different approach.
As to whether Coles is in fact a schoolyard bully, or just a misunderstood lonely fat kid trying to make friends, probably the Federal Court won’t really be in a position to say.