Coles has agreed to pay $5.25 million more to Norco dairy farmers, after the consumer watchdog found it wasn’t passing on the full 10 cent price hike that it was charging consumers.
The ACCC says it was prepared to take Coles to court over the misleading marketing around the price hike, in what it’s labelled ‘an egregious breach of the Australian Consumer Law’.
The investigation focused on claims that when an unrelated 6.5 cpl increase commenced on 1 April 2019, Coles reduced its payments to Norco under the 10 cpl retail price increase from 10 cpl to 3.5 cpl.
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The ACCC Chair Rod Sims says they were fully prepared to go to court, before Coles agreed to commit extra money to Norco.
“We believe we had a strong case to allege misleading conduct by Coles.
“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.”
“Court action would also have taken many months if not years, with no guarantee that any money would have been paid to farmers as a result.
“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.
“We are pleased that Norco farmers will now receive additional money, commencing within seven days.”
“We take commitments made to us very seriously. The ACCC will be keeping a very close eye on Coles to ensure they follow through on this commitment, and we are not ruling out future litigation if necessary,” Mr Sims said.
Coles has committed to pay the $5.25 million lump sum to Norco for distribution to farmers within 7 days, which represents an additional 7 cpl base milk price increase for the period between 1 April 2019 and 1 December 2019.
Coles will then also pass on the additional 7 cpl to Norco farmers for the period between 1 December 2019 and at least 30 June 2020 by increasing the base milk price paid to Norco for 2 litre and 3 litre Coles branded fresh milk by 7 cpl.
The additional 7 cpl is more than the 6.5 cpl amount which the ACCC alleges was not passed through to Norco farmers.
Payments from Coles will be paid directly to Norco for distribution to its farmer members.
The ACCC understands that Coles did pass on the 10 cpl retail price increase to other dairy processors.