By Madeleine Heffernan
The competition watchdog will not appeal a Federal Court ruling that Woolworths did not act unconscionably when it demanded up to $60 million in cash from suppliers to plug a profit shortfall.
Australian Competition and Consumer Commission chairman Rod Sims said the watchdog had decided not to appeal the judgement after careful consideration.
Woolworths has won its case against the competition watchdog. Pictured: Chairman Gordon Cairns and CEO Brad Banducci.Credit: Jessica Hromas
"In particular, the ACCC has noted the acceptance by the Court of the evidence given by Woolworths executives, and the Court's comments on the ACCC's reliance on documents to establish its case," he said.
"The ACCC will take these comments into account in its consideration of future cases on unconscionable conduct, including in the supermarket sector."
The decision has left suppliers on watch, particularly as the big chains cull product lines, said Gary Dawson, chief executive of the Australian Food and Grocery Council. The council represents packaged food, drink and grocery manufacturers.
Relations between the big chains and suppliers became heated as supermarkets squeezed suppliers to boost profit margins.
A "contrite" Coles admitted to 15 instances of unconscionable conduct against eight suppliers in late 2014.
Days later, Fairfax Media revealed that Woolworths suppliers were told their products could be pulled from shelves just days before Christmas if they refused to fund the supermarket giant's new advertising campaign. This led the ACCC to pursue Woolworths for unconscionable conduct.
Federal Court judge David Yates said earlier this month he was not satisfied "in light of all the circumstances brought forward that Woolworths' design or implementation of the Mind the Gap scheme was unconscionable, as the ACCC has alleged".
"I accept Woolworths' submission that a party's 'legitimate interests' will extend to include its interest in pursuing its lawful business in a profitable way and in a manner that minimises its costs.
"I am satisfied that the 'asks' made of suppliers, as part of that co-ordinated approach, were typical of the approaches for financial support and negotiations that took place between Woolworths and various suppliers at other times and on other occasions, albeit that the approaches and negotiations at those times and on those occasions were not part of a co-ordinated approach across the whole of the Woolworths Supermarkets business.
"I'm not satisfied Woolworths has contravened section 21 of the Australian Consumer Law as alleged," he found.