Coles forced to pay dairy farmers $5.25m

Marco Green
December 7, 2019

An ACCC investigation found Coles Group Limited (Coles) failed to pay Norco dairy co-operative the 10 cents per litre it charged consumers for Coles fresh milk - despite claims in Cole's marketing materials.

The ACCC investigated claims that Coles represented that the full benefit of the 10 cpl retail price increase would be passed on to farmers.

That additional 7 cpl Coles will now pay to Norco is greater than the 6.5 cpl originally not passed on to the farmers.

Sims said the ACCC had been "fully prepared" to take Coles to court over the allegations.

That totals about $5.25 million between April 2019 and June 2020, the ACCC said.

"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", Mr Sims continues.

"By simply saying "okay we'll drop the court action if you pay the money" we get the money to farmers".

Coles' statements included: "An extra 10 cents per litre to Australian Dairy Farmers", and, "Coles will pass the extra 10c per litre to processors who will distribute all of the money to the farmers who supply them with milk for Coles Brand".

RETAILgiant Coles is being forced to pay $5.25 million to the nation's struggling dairy farmers after being accused of misleading consumers by stating it would pass on its price rise on supermarket-branded milk.

Coles delighted many across Australia when it announced in March this year that it was raising the cost of the its own brand milk by 10 cents.

At 1052 AEDT, Coles shares were 0.3 per cent higher at $15.26, outperforming the consumer staples sector's 0.2 per cent rise but falling short of an overall 0.9 per cent increase for the overall share market.

"Coles supports proposals to make Australia's dairy industry more sustainable, and we are continuing to explore long-term solutions with government and industry stakeholders".

"Coles respects the regulatory process but disagreed with the ACCC's interpretation of these issues", it said.

A social media from Coles about the 10 cent price increase. "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.

"This is on top of the 10c per litre on 2L and 3L Coles Brand milk that Coles has been paying since March".

Payments from Coles will be paid directly to Norco for distribution to its farmer members. "However, we know that many dairy farmers can not wait for structural reform to be delivered so we are moving to provide relief right now".

/Public Release. View in full here.

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