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Australia's consumer watchdog is stepping up its investigations into Coles and Woolworths after evidence the supermarket giants are bullying suppliers.

WA farmers welcomed the Australian Competition and Consumer Commission's move, which came after suppliers said the supermarkets threatened them and hit them with unfair charges.

ACCC chairman Rod Sims said evidence from 50 suppliers included widespread allegations of the supermarkets misusing their dominate positions by:

·Threatening to remove products from sale.

·Imposing unfair penalties.

·Demanding payments above agreed terms of trade.

·Refusing to pay agreed prices.

·Discriminating against suppliers in favour of their own brands.

Mr Sims told a Senate estimates committee there were "allegations of some conduct that does not conform to acceptable business practice and may be unconscionable or a misuse of market power".

He said that from the start of the investigation it was clear suppliers were reluctant to speak for fear of the consequences.

The ACCC will gather more evidence from suppliers using its compulsory information powers before deciding what to do.

Wesfarmers, which owns Coles, said yesterday it was conducting its own investigation into its treatment of suppliers.

"We've got internal processes to ensure we behave in a responsible and ethical way," managing director Richard Goyder said.

"If there's evidence that any of those things apply to us, we'll obviously co-operate with the ACCC through any investigation and deal with any issues."

Woolworths said it was co- operating with the investigation and focused on ensuring its dealings were fair and lawful.

WAFarmers dairy section president Phil Depiazzi said greater scrutiny of Coles and Woolworths was long overdue.

"This has been the concern of farmers, and dairy farmers in particular, all along, that processors and suppliers are operating in a climate of fear," he said.