Coles denies it “sits out” fresh produce suppliers who challenge the supermarket giant’s pricing, as a public inquiry into competition in the sector closes.
The alleged practice of sending contrary suppliers on a “supplier holiday” formed part of the competition watchdog’s final day of public hearings on Nov. 22.
Some supermarket suppliers received prices below the cost of production from major chains, with little choice but to agree to unfavourable terms because of the grocers’ market heft, the Australian Competition and Consumer Commission (ACCC) said it was told.
Asked if Coles used a supplier holiday tactic, the company’s chief commercial officer Anna Croft said: “No, it’s not a term I’ve heard used in the business.”
In a terse exchange with counsel assisting Naomi Sharp SC, Croft refused to be drawn on whether Coles was contractually bound to take a specific volume of fresh produce from suppliers.
Executives from the ASX-listed company defended its dealings with suppliers on the issue of accreditation after the inquiry pointed to complaints about the high cost.
Coles representatives said they were aware of complaints but maintained accreditation on issues such as sustainability, quality and ethical sourcing was “incredibly important.”
Earlier, property manager Fiona Mackenzie revealed Coles held 42 freehold sites across the country, with 17 not yet subject to development applications.
Over two sessions, Coles executives have denied engaging in land banking, the alleged practice of the dominant chains buying sites to block competitors moving into the same location.
Rather, Coles says it identifies a gap in the market, procures a site and plans a development, which could take up to seven years.
Mackenzie said there were three types of Coles non-DA sites, comprising smaller parcels of land waiting for amalgamation, some being rezoned and a small number “awaiting population.”
Asked on Nov. 21 about a site at Maylands in Perth that had been held by Coles since 2008, the company rejected it represented land banking because it was earmarked for a large liquor store.
“An IGA has opened immediately opposite and (there’s) an Aldi close too,” Mackenzie said.
The Australian Competition and Consumer Commission in September said it had received submissions raising concerns about land banking, but it was yet to form a view.
IGA supplier Metcash and peak body NSW Farmers were concerned about the alleged practice.
Coles and Woolworths—which dominate two-thirds of the grocery market—can afford longer development timelines than independent grocers and snap up land they may not develop for some time, Metcash said in a submission to the commission’s interim report.
Sharp also quizzed Coles executives about its loyalty programs on Nov. 21, suggesting they discouraged shoppers from going elsewhere.
“It is the intention that customers choose to shop Coles,” chief customer officer Amanda McVay replied.
The watchdog’s final report will go to Treasurer Jim Chalmers by Feb. 28.
The federal government is trying to keep a lid on prices at major supermarkets amid a cost-of-living crisis and high inflation before an election due by May 2025.
