Coles to pay farmers $5.25m after failing to pass on 10c drought levy

ACCC chair Rod Sims said the regulator had been “fully prepared” to take Coles to court over the action, which he called an “egregious breach” of consumer law.

Instead, Coles proposed it would pay Norco an additional 7 cents per litre for its two and three-litre bottles of homebrand milk, an agreement Mr Sims concluded was a better outcome for farmers.

We were fully prepared to take Coles to court over what we believe was an egregious breach of the Australian Consumer Law.

ACCC chair Rod Sims

“Coles allowed farmers, consumers and the Australian public to believe that its 10 [cents per litre] price rise would go straight into the pockets of dairy farmers, when the ACCC alleges this was not the case for Norco farmers,” Mr Sims said.

A sample of the representations made by Coles regarding its 10 cent levy.Credit:ACCC

“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.”

“Court action would also have taken many months if not years, with no guarantee that any money would have been paid to farmers as a result.”

Coles will pay a lump sum to Norco within one week, which represents the unpaid levy from April 1 to December 1.

Coles has also pledged to pass on the additional 7 cents per litre to Norco farmers from December 1 through to at least June 30, 2020.

In a statement, a Coles spokesperson said that while the company respected the regulatory process, it disagreed with the ACCC’s “interpretation of these issues”.


The supermarket said the ACCC had taken issue with the interaction between the milk levy and the company’s existing commercial arrangements with Norco.

“In order to avoid an unnecessary dispute and provide immediate much-needed support to Norco farmers dealing with the ongoing impact of drought and bushfires, Coles proposed the investment of an additional 7 cents per litre for two-litre and three-litre Coles brand milk purchased from Norco
between April 1 this year and at least the end of June 2020,” the spokesperson said.

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