Coles will increase its payments to dairy co-operative Norco by over $5.25 million after the ACCC raised concerns that the supermarket giant misled consumers about price increases being passed on to farmers.

In March, Coles increased its milk price to 10c per litre for 2L and 3L Coles Brand milk, but the consumer authority began investigating the situation after claims that when an unrelated 6.5 cpl increase commenced on April 1, 2019, Coles reduced its payments to Norco under the 10 cpl retail price increase from 10 cpl to 3.5 cpl.

While the supermarket says it “disagrees with the ACCC’s interpretation of these issues”, it is now planning to pay Norco a A$2.8 million lump sum to be distributed to farmers as well as an additional 7c per litre for 2L and 3L Coles Brand milk produced by Norco until the end of the financial year.

“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,” ACCC Chair Rod Sims said.

“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.”

The ACCC did not raise issues in relation to any other processor.

Woolies and Aldi also raised prices for farmers this year to help with drought conditions. Aldi increased the price of milk by 10 cents per litre while Woolworths removed the A$1 per litre fresh milk from its stores nationwide.