More than 200 dairy farms across northern NSW and Queensland will receive an average $10,000 payday from Coles after the supermarket giant allegedly misled them over their share of milk price hikes.
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Coles on Thursday agreed to pay dairy cooperative Norco $5.25 million after an Australian Competition and Consumer Commission investigation.
The ACCC probed allegations the supermarket failed to follow through after indicating in March it would give farmers the full benefit of a 10-cent-per-litre price hike for its Coles-branded two-litre and three-litre milk.
The commission claims that when an unrelated 6.5-cent-per-litre increase to Norco commenced in April, Coles reduced payments to the dairy cooperative under the retail price hike to 3.5 cents per litre.
The ACCC believed the 10 cents per litre should have been in addition to the unrelated 6.5-cents-per-litre rise Coles had already pledged. It labelled the company's actions an "egregious" breach of consumer law.
ACCC chair Rod Sims on Thursday said Coles had agreed to pay a $2.8 million lump sum to Norco within seven days - to be passed on directly to farmers - to address the shortfall between April and December 2019.
On average, the cooperative's 214 dairy farms in northern NSW and Queensland will get an immediate windfall of $10,000.
Coles will also increase milk payments to the cooperative by seven cents per litre between December 2019 and at least June 2020.
"There's complete compensation, indeed more than complete compensation for farmers as a result of what Coles have offered to do in the face of us taking them to court," Mr Sims told reporters in Sydney.
"This was a high-profile statement made - that the farmers would get the 10 cents per litre as a result of the price of milk being put up by 10 cents per litre.
"It was put up to give the money to farmers, yet what happened here is, from April 1, the farmers only got 3.5 cents per litre."
Mr Sims said the settlement was preferable to court action as it ensured the farmers received the funds, rather than Coles solely paying a fine.
The ACCC understands Coles passed on the 10-cents-per-litre increase to other dairy processors. Norco also sells milk under its own brand.
"There was no way through the court process that money could go back to the farmers - that's the trade-off we made," Mr Sims said.
"Getting money back to farmers at this time is extremely important."
Coles in a statement on Thursday said it "respects the regulatory process but disagreed with the ACCC's interpretation of these issues".
The company said it agreed to the payments in order to avoid "an unnecessary dispute" and to assist dairy farmers amid the ongoing drought.
Australian Associated Press
