ACCC launches court action against Woolworths for ‘unconscionable conduct’ against suppliers
The Competition watchdog has launched court action against supermarket chain Woolworths alleging it engaged in unconscionable conduct by demanding more than $60m in supplier payments last year to plug a profit shortfall.
Woolworths: facing court action for unconscionable conduct.
The Australian Competition and Consumer Commission will allege that late last year senior Woolworths management approved the supplier payment scheme called ‘Mind the Gap’, which it is claimed was systematically aimed at urgently reducing Woolworths’ expected significant half year gross profit shortfall. It is alleged the supermarkets’ category managers and buyers contact 821 “Tier B” suppliers and asked for payments ranging from $4,291 to $1.4m to “support” the struggling retail chain.
Suppliers who did not agree to a payment would be seen as not “supporting” Woolworths and the ACCC will allege the chain chose suppliers where it had a substantially stronger bargaining position and did not have a pre-existing contractual entitlement to seek the payments.
If this really is international practice, it needs to cease. That kind of “engagement” is something everyone can do without.
“We aren’t making margin, so you pay up, kapisch?”
That doesn’t sound like abysmal management.
Too much market power at play here.
Hence why they approached ‘Tier B’ suppliers as they would have the most to lose if they didn’t cough up the cash.
Bloody disgraceful conduct.
If its proven, the fine should be double what the suppliers had to pay.
It hasn’t been a very good year for Woolies, and it looks like it’s only going to get worse next year. I hope more people continue to boycott this horrendous business.
Yes what does “international industry practice” mean ? Bribery is a wide spread practice internationally, is that OK? The only way this will ever change is when the supermarket Duopoly is broken, then returning power back to customers and suppliers.
Can we Innovate that one please!/
Once upon a time a humble smith told an evil ruler that there were no resources available after hours to work at their beck and call, and instead they would have to wait for the sun to rise when the work could be done post haste. The evil ruler grew very angry and threatened to starve the entire village if their demands were not met. This worried the smith’s sire, and so sacrifices were made to appease the evil ruler. Nobody lived happily ever after.
So cowardly to go after the ‘Tier B’ suppliers, knowing full well that if they tried this nonsense with the Arnotts or Coca Cola’s of the world they would have been laughed at.Targeting vulnerable suppliers that are desperately trying to keep up with the big guys is a shameful act and they should be penalized severely.
Another glimmer of PR gold for the Woolworths press release section.
“international industry practice” is to demand free money from your suppliers when your sales are down? Really?
So if I buy my sausages and bread at Woolies to run a weekend sausage sizzle, but I don’t sell as many as I’d like, Woolies would be happy to hand a bunch of money over to me? Sounds great!