Retribution ?

There is a saying that "Power Corrupts - and that absolute power corrupts absolutely ! " - and that could certainly apply to a fine imposed on Coles by the Australian Competition and Consumer Commission  ( ACCC).   The ACCC ordered this grocery behemoth to pay a ten million dollar fine and a further $1.25 million in legal costs - as well as repayments to suppliers gouged by it's profit reclamation practices that could run well over a further ten million dollars.

The massive Australian grocery trade is shared by just two supermarket chains and it seems that one of them used it's power to force it's suppliers to contribute unwillingly to it's profits on what it termed "Perfect Profit Day ".  Coles levied what amounted to a "fine "for any product that failed to meet their "budgetted profit levels " and claimed back money for "waste " and "mark downs ".   If a supplier refused,  measures would be imposed that would be "commercially detrimental ".   In other words, their products would disappear from sale on the supermarket's shelves.

Top management has apologised and promised that there will be no repeat of this practice, but welcome to the real world and examine this existing situation in the light of reality.  The actions of the ACCC certainly constitute a win for the vast array of firms who supply the grocery trade, but bringing this malpractice to the attention of the ACCC will certainly come at a cost.

Undoubtedly, the imposition of these fines divided the suppliers into two camps.  Some grumbled and moaned, but  caved in to the power of their customer and accepted the deal.   Others fought long and hard - and resisted to the point of lodging complaints which resulted in the ACCC investigation that led to Coles being shamed and fined.

The same management team remains in place at Coles and all those suppliers have to deal with this behemoth to get their product prominently displayed and offered to the public - and all the power remains with the supermarket.   It is sheer human nature to expect that those who led the push against what can only be termed "commercial extortion " will be less favourably regarded than those who accepted without a whimper.

Some firms simply build in a factor in their price structure to accommodate expected price gouging as normal business practice when dealing with powerful market forces.   They accept that any form of resistance brings consequences and their prime aim is to keep the supply of their goods flowing without interruption.   More courageous firms stand on principle, and rebel when confronted with demands that are not normal business practice.

The ACCC exists to see that business is conducted on a level playing field and it's actions have struck down a practice that is not only illegal - but ethically immoral.  Unfortunately, it has no power to ensure that whistle blowers are protected from retribution.   The purchasing policies of traders are made on "commercial grounds " and that is the very basis for running a successful business.   A huge variety of reasons can apply for selecting what is - and what is not - presented to the public.

The danger is that any firm that led the charge to counter unfair trading practices may gain a reputation as a "trouble maker " is the entire industry and find it's products being shunned.  It is one of the disadvantages of allowing a small number of traders to completely dominate an industry that they have the power to decimate suppliers who draws their ire.

This ACCC fine will be a hollow victory if retribution thins the ranks of those who opposed an unfair profit grab !