The Coles Group has been ordered to pay a dairy cooperative $5.25m after mispaying farmers.
The retailer failed to increase payments to the Norco Cooperative’s dairy farmers after raising the milk’s market price by 10c per litre (cpl) for own-brand two and three-litre milk containers, a watchdog investigation found.
The Australian Competition and Consumer Commission (ACCC) alleged the retailer’s marketing said the benefits of the retail price increase would go to farmers.
Rod Sims, chair at ACCC, said: “We were fully prepared to take Coles to court over what we believe was an egregious breach of the Australian Consumer Law. We believe we had a strong case to allege misleading conduct by Coles.
“Coles allowed farmers, consumers and the Australian public to believe that its 10cpl price rise would go straight into the pockets of dairy farmers, when the ACCC alleges this was not the case for Norco farmers.”
Coles has agreed to pay dairy farmers compensation of 7cpl for milk supplied between 1 April 2019 and 1 December 2019 in a lump sum of $5.25m to Norco. The base milk price for dairy supplier members of Norco will then increase by 7cpl between 1 December 2019 and at least 30 June 2020.
Sims added: “Accepting this commitment means that farmers will receive additional payments from Coles, with the majority of the money to be paid to Norco within seven days.”
Coles will give the ACCC an independent audit report to show compliance with the commitments and work with Norco to ensure the pay is distributed to dairy farmers.
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