Suppliers allege bullying against Metcash in legal action

Supermarket owner Metcash has been accused of bullying by two of its suppliers, just weeks after rival supermarket giant Coles paid a $10 million penalty over similar allegations.

Nelson McKinnon Lawyers this morning confirmed to SmartCompany the firm is acting for two suppliers, Cofco Distributors and Fasttrack Logistics, in regards to allegations of unconscionable conduct.

The two Indonesian-owned companies have alleged Australia’s third biggest supermarket business asked for “excessive” rebates from suppliers and forced them to fund international business trips for Metcash staff, according to a statement of claims seen by Fairfax.

A Metcash spokesperson told SmartCompany this morning the supermarket was not in a position to comment on an ongoing legal matter but said the company would “defend their position vigorously”.

Fairfax reports the statement of claim, which was lodged in the New South Wales Federal Court in December, alleges Cofco and Fasttrack paid rebates of up to $10.36 million to Metcash, which created cash flow problems and losses for the companies.

According to Fairfax, the claim also alleges Metcash asked the suppliers to fund business-class study tours to places such as Japan, Las Vegas and Hawaii.

Cofco alleges it paid $395,275to send Metcash employees on the overseas trips. SmartCompany understands these tours are common practices for independent supermarkets to source their products.

SmartCompany understands Cofco Distributors and Fasttrack Logistics have been suppliers of Metcash for around 12 years and share a director, Lawrence Homarwijaya.

It is understood the case went before the Federal Court this morning but both parties have agreed to an adjournment until March.

Unconscionable conduct has been in the crosshairs of the Australian Competition and Consumer Commission in the last 12 months after action was taken against Coles. Woolworths was also accused of bullying late last year.

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany while he believes the legal matters against Metcash need to go through the courts, he says the actions of Coles and Woolworths are more detrimental to small suppliers and the Australian economy.

“The bigger issue is Coles and Woolworths, because they are impacting productivity in this country,” says Strong.

“The bottom line is they are the ones with a huge impact on the Australian economy.”

“We need to make sure that if there is any cultural behaviour of bullying by big business, that that is stamped out,” says Strong.

SmartCompany contacted Cofco Distributors and Fasttrack Logistics but did not receive a response prior to publication.