Coles’ $5m Penalty Not Enough According to Independent Grocers
Friday 27 February 2015 @ 11.06 a.m. | Trade & Commerce
The Australian Competition and Consumer Commission (ACCC) has called on the Federal Court to hand Coles a penalty of over $5 million for misleading consumers over the freshness of its bread products, with independent supermarkets calling for an even bigger fine.
Background
In June 2013, the ACCC commenced proceedings in the Federal Court against Coles, alleging the supermarket giant had engaged in false, misleading and deceptive conduct in regards to various Cuisine Royale and Coles Bakery branded bread products. The alleged false, misleading and deceptive conduct is in contravention of s 18 of the Australian Consumer Law (ACL) (Sch 2 of the Competition and Consumer Act 2010 (Cth)).
The ACCC claims Coles promoted its bread as "Baked Today, Sold Today" and "Freshly Baked In-Store" when the bread was actually partially baked and frozen in Ireland then transported to Coles stores and "finished" in store.
In September 2014, Coles was slapped with a three-year ban on advertising its bread as being freshly baked.
In the latest twist in the case, Fairfax reports the ACCC called for a penalty of at least $4 million to $5 million over the ACL breaches during a penalty hearing in the Federal Court during February 2015.
According to the report, Coles’ legal counsel responded by arguing against the idea it should be handed a large penalty because it is a large company.
Industry Reaction to the Penalty
Jos de Bruin, chief executive of independent supermarkets association Master Grocers Australia, said that a $5 million penalty is not enough for a major retailer such as Coles:
“For a multi-billion dollar company like Coles, it’s just a little slap on the wrist . . . They’ll most likely pay the fine because they know their reputation is worth far more than $5 million and so they’ll probably just pay the fine to get the legal action over with.”
Response from Coles
A spokesman for Coles said he could not comment on the matter citing ongoing legal proceedings.
However, in a statement issued at the start of proceedings, Coles said it would vigorously defend itself against the accusations:
“In talking to customers about the ‘par-baked’ bread range we certainly never set out to deliberately mislead anybody but we completely accept that we could have done a better job in explaining how the products are baked.”
A spokesperson for the ACCC said the watchdog would not comment until the judgment on penalties is made.
While not speaking directly about the case at hand, Small Business Minister Bruce Billson commented:
“… the government has provided more than $80 million in extra resources to the ACCC to ensure a competitive environment … And that includes taking very seriously providence and quality claims so consumers aren’t ripped off.”
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