ACCC proceedings against Safeway Stores that commenced in 1996 with allegations that the company had a policy of removing a particular baker’s products from sale when their products were on special at nearby independent stores, have concluded following a lengthy trial and an appeal to the Full Federal Court and the High Court.

A penalty of $8.9 million has been imposed by the Federal Court on Australian Safeway Stores Pty Ltd for fixing the price of bread and misusing its market power in a number of instances.

The court also declared that Mr Mark Jones, the bread category manager at the time, was knowingly concerned in the price fixing arrangement between Safeway and Tip Top in relation to the price of
bread at Preston Market. The court ordered Mr Jones pay a penalty of $50,000.

The Full Court unanimously agreed that the Australian Competition and Consumer Commission had established that Safeway had engaged in price-fixing of bread to be sold at the Tip Top bakery store located in Preston Market. The majority of the court found that Safeway had misused its market power in four of nine incidents pleaded.

The allegations of misuse of market power concerned the supply of bread by Tip Top, Buttercup and Sunicrust Bakeries to retailers who discounted the price of bread. The ACCC alleged that Safeway took
action against each of the bread manufacturers to induce them, or attempt to induce them, to take action to have the discounting cease.

It was alleged that Safeway refused to accept further supplies of bread from a baker where the baker was supplying retailers who were discounting the price of bread. The space normally occupied by the affected baker being filled with another baker’s product. The ACCC alleged that Safeway recommenced purchasing bread from the manufacturer concerned once the discounter ceased discounting.