Woolworths wins Mind the Gap case from ACCC

Woolworths won its Mind the Gap case from the Australian Competition and Consumer Commission (ACCC) on Thursday as the Federal Court dismissed the case. ACCC took the retail store the court in December last year.

The commission accused the retail giant of unconscionable conduct by making unreasonable demands for money from suppliers to fill a gap in the store's profits. It claimed that the retailer has collected a total of $18 million from suppliers to reduce a $53 million shortfall in its half-year profits.

There were also allegations that the retail company has escalated demands against suppliers that refused to pay a required amount. It even threatened suppliers by providing lesser marketing support in stores and delisting the suppliers from supermarket shelves.

"It may be that some would see Woolworths' conduct in making 'asks' (requests to suppliers for payments) and seeking 'payments' as unjustified, unfair or unjust according to their own standards of commercial propriety," Justice David Yates said in a statement.

Yates said that there was no evidence presented that will keep the case strong. He also said that he accepted the retail company's scheme was unusual. However, he also noted that the scheme was typical on how Woolworths' deal with its suppliers.

"We defended the case because we firmly believed we did not act unconscionably and we did not break the law," Woolworths chief legal officer Richard Dammery said in a statement.

Rod Sims, ACCC chairman, said that the commission would consider the judgment.

"The ACCC took this action because we considered that Woolworths' behaviour went well beyond hard commercial bargaining and is not consistent with business and community values," Sims said in a statement.

He also said that it is very hard for suppliers that are subject to arbitrary demands to make future investment decision during financial uncertainty.

The ACCC has been ordered to pay a portion of Woolworths' legal costs.