SYDNEY Dec 8 Australian supermarket giant
Woolworths Ltd won a court victory on Thursday against
the competition regulator, as a judge dismissed claims the
retailer had pressured suppliers to make payments to fund an
The Australian Competition and Consumer Commission (ACCC)
accused Woolworths of seeking about A$60.2 million ($43.84
million) in payments from suppliers to help boost flagging
earnings under a scheme the company called Mind the Gap.
The watchdog argued the scheme took advantage of Woolworths'
superior bargaining power against about 800 suppliers, in
contravention of consumer law. It wanted Woolworths to refund
suppliers and pay related costs.
But Federal Court Judge David Yates said the ACCC failed to
prove that Australia's No. 1 grocery chain had treated suppliers
badly. Its case relied on emails and internal documents but
lacked witnesses to explain supermarket-supplier relations, he
"It is simplistic to approach the trading relationship
between a supermarket retailer and its suppliers as one where
the retailer has complete and unilateral control over the gross
margins it makes," Yates said in his judgment.
"There was some suggestion of this approach in the ACCC's
The ACCC argued that Woolworths managers had asked a large
number of "tier B" suppliers for payments of A$4,291 to A$1.4
million, with the aim of cutting a projected shortfall in
half-year profit by Dec. 31, 2014.
Woolworths sought about A$60.2 million and received around
A$18.1 million, the ACCC said.
But Woolworths said the regulator gave a "simplified and
mistaken characterisation of the commerce in question",
according to the judgment.
The ACCC said in a statement following the judgment that it
believed Woolworths's actions "went well beyond hard commercial
bargaining and (were) not consistent with business and community
values". It added that it would carefully consider the judgment.
In April, Wesfarmers Ltd, which owns Woolworths
rival Coles, said the head of its department store Target quit
amid an investigation into whether the chain inflated earnings
by bringing forward supplier rebates.
(Reporting by Byron Kaye; Editing by Stephen Coates)