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Coles to pay $5m to drought-stricken farmers over ‘egregious’ milk claims

Coles will pay $5.25 million to dairy farmers. Images: Coles, Getty

Coles will pay $5.25 million to dairy farmers after the competition watchdog claimed the supermarket giant may have misled the public about its 10 cents per litre (cpl) increase by suggesting the price rise would be wholly passed on to farmers.

In March, Coles claimed it would increase its Coles-branded milk prices by 10 cpl and would pass on that entire 10 cents to struggling farmers.

This was communicated through a wide-ranging marketing campaign beginning on 19 March 2019. 

At the time, Coles said: “Coles will pass the extra 10c per litre to processors who will distribute all of the money to the farmers who supply them with milk for Coles Brand,” and “an extra 10 cents per litre to Australian Dairy Farmers.”

Image: Coles

But today, the ACCC said Coles did not pass along the full amount to Norco.

It said that two weeks after the 19 March announcement, Coles cut its payments to Norco from 10 cents down to 3.5 cents due to an unrelated 6.5 cpl price rise that began on 1 April.

Coles has now committed to paying Norco dairy farmers $5.25 million, or an additional cpl for 2-litre and 3-litre Coles-branded fresh milk for the milk supplied between 1 April 2019 and 30 June 2020.

That additional 7 cpl Coles will now pay to Norco is greater than the 6.5 cpl originally not passed on to the farmers. 

“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,” said ACCC chair Rod Sims.

“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.”

He said Coles had allowed farmers and the public to believe that its 10-cent price rise would “go straight into the pockets of dairy farmers”, but said the ACCC believes this “was not the case for Norco farmers”. 

“We take commitments made to us very seriously. The ACCC will be keeping a very close eye on Coles to ensure they follow through on this commitment, and we are not ruling out future litigation if necessary,” Sims added.

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