The Australian Competition and Consumer Commission (ACCC) alleges in a Federal Court case  this week that Woolworths Group Ltd (WOW) demanded extra payments from suppliers at short notice as part of its Mind the Gap program.

In December 2015, Australian Food News reported the present Federal Court action against Woolworths claiming that the Mind the Gap charges were designed to extract AUD $60 million from suppliers in the 2014 pre-Christmas trading season.

Specifically, 821 “tier two” suppliers were asked for payments from AUD $4,291to AUD $1.4 million – any supplier unwilling to pay was seen as “not supporting” Woolworths.

The ACCC vs Woolworths case is expected to last five days.

In 2015, the ACCC won a similar action against Coles which was fined AUD $10 million for misusing its bargaining power and obliged to reimburse affected suppliers AUD $12 million.

The ACCC believes that using its strong bargaining position Woolworths captured AUD $18 million from the targeted suppliers.

Woolworths is countering that:

• payments from suppliers were part of ordinary commercial arrangements
• the company aimed to achieve AUD $11 million in the Mind the Gap program
• the Mind the Gap program was entirely legal and consistent with commercial practice at the time.

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