Coles has been instructed to refund over $12 million to suppliers and suppliers are also allowed to exit the ARC program without penalty or have their ARC contribution rebates reviewed. In addition to the refunded amounts, this will result in further substantial ongoing savings for Coles’ suppliers.

“The arbitration process conducted by the Hon Mr Jeff Kennett AC, has proven both extremely timely and effective with significant benefits to suppliers,” ACCC chairman Rod Sims says.

“The process will also deliver flow on effects for suppliers more broadly as a result of changes Kennett says Coles has begun to implement that affect the way it deals with its suppliers.”

The refunds process arose out of the resolution of two proceedings commenced by the ACCC against Coles in 2014: the ‘ARC proceedings’, and the ‘claims proceedings’. In December, the Federal Court made declarations in both proceedings by consent that Coles had engaged in unconscionable conduct in 2011 in its dealings with certain suppliers.

“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. Ultimately, it was a matter for each supplier to decide whether or not to proceed with the resolution proposed, and as Kennett’s report demonstrates, a very large number accepted the relief offered by Coles.”

“The arbitration process was intended to provide an efficient alternative to otherwise lengthy and costly processes in determining the loss and damage of affected suppliers. Kennett has now finalised his deliberations and has instructed Coles to refund over $12 million to a number of ‘Tier 3’ suppliers and a further $324,000 to suppliers listed in the claims proceedings. This is in addition to the penalty ordered by the court of $10 million,” Sims adds.

Under the arbitration process, it was also open to suppliers to simply exit the ARC program. A number of suppliers took this option. Suppliers who sought a review of their eligibility for refunds also had the option to exit the ARC program.

“Kennett has reported that his arbitration process has resulted in substantial ongoing savings for suppliers. Exit from the program chosen by some suppliers and reduced rates for others will save suppliers significant additional costs into the future.”

Kennett’s determinations, as the independent arbiter, are binding on Coles and Coles has already moved to implement steps necessary to comply with those determinations.

Coles has advised the ACCC that it intends to become a signatory to the Food and Grocery Code from 1 July 2015. The introduction of an effective and equitable dispute resolution process for disputes arising between retailers or wholesalers and suppliers is a key feature of the Code.