Supermarket giant Coles has paid $5 million to a group of farmers after accusations it short-changed them on a scheme to provide drought relief.
The Australian Consumer and Competition Commission investigated allegations the supermarket giant failed to follow through on indications in March it would pass on to farmers the full benefit of a 10-cent-per litre price hike for its Coles-branded two and three litre milk.
The supermarket chain began paying the extra 10 cents to Norco suppliers but when a previously agreed 6.5 cents/litre increase kicked-in, the amount was reduced.
The ACCC believe this was an "egregious breach" of the Australian Consumer Law and had been prepared to take the company to court to allege misleading conduct,
ACCC chair Rod Sims said on Thursday."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,"
Mr Sims said in a statement.Coles has committed to pay an additional seven cents per litre for two and three-litre Coles-branded fresh milk, amounting to $5.25 million to Norco for milk supplied between April 2019 and June 2020.
"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 said.
The ACCC understands Coles passed on the 10 cents per litre increase to other dairy processors.
Coles in a statement on Thursday said it "respects the regulatory process but disagreed with the ACCC's interpretation of these issues".
Coles has declined a request by Dairy News Australia to answer questions about the disputed facts.
Coles will pay Norco a $2.8 million lump sum to be distributed to farmers as well as a further seven cents per litre for two and three-litre Coles-brand milk produced by Norco until at least the end of the financial year.
Coles said in an anonymous statement:
"Coles is pleased to be able to provide additional support to Australian dairy farmers while we continue to work with industry and government stakeholders to find long-term solutions to ensure the sustainability of the Australian dairy sector.''