Rod Sims

Taking action: Rod Sims said "large demands" were made. Photo: Andrew Meares

The competition watchdog's investigations into how the big supermarket chains treat suppliers stretch as far back as November 2011, when ACCC chairman Rod Sims, four months into his five year term, noticed media reports indicating suppliers were being treated unfairly.

It was from late 2011 and into early the following year that the ACCC sought information from market participants about these concerns.

However, it soon became clear that suppliers were reluctant to speak to the ACCC for fear of what they perceived may be the consequences of providing information to the competition watchdog.

Mr Sims then called on suppliers to provide information to the ACCC on a confidential basis, whereby he would seek to protect and maintain that confidentiality.

This call generated around 50 suppliers approaching the ACCC on a confidential basis to discuss practices by the major supermarket chains that they were concerned about.

It was shortly after that in 2012, having identified areas of concern, the ACCC commenced an in-depth investigation into those issues around the treatment of suppliers by the supermarket chains, Woolworths and Coles.

The fruit of that initial investigation exploded into the public spotlight when on February 13, 2013 - nearly three years after the issue first pricked the interest of the watchdog - Mr Sims appeared before a senate estimates committee and updated the committee on his investigations to date.

Mr Sims shocked onlookers by airing allegations of conduct that might be unconscionable or a misuse of market power by the supermarkets.

At that time no supermarket chain was named, but the allegations were, and included:

  • persistent demands for additional payments from suppliers, above and beyond that negotiated in their terms of trade;
  • the imposition on suppliers of penalties that did not form part of any negotiated terms of trade, and which apparently do not relate to actual costs incurred by the major supermarket chains as a result of the conduct which has led to the penalty being imposed;
  • threats to remove products from supermarket shelves or otherwise disadvantage suppliers if claims for extra payments or penalties are not paid;
  • failure to pay prices agreed with suppliers; and
  • conduct discriminating in favour of home brand products.

Between June 2012 and December last year the ACCC conducted extensive in-depth investigation using compulsory information gathering powers that required suppliers and Coles to provide information.

That culminated in Monday’s action in the Federal Court.