Colse facing court over claims of predatory pricing on cigarettes

Coles is battling a Federal Court claim of misuse of market power for predatory pricing on its cigarettes.

Former tobacco store owners Anthony, Rebecca and Michael Rachelle have brought the claim against the supermarket giant which will be heard in the Federal Court on Friday.

Anthony and Rebecca Rachelle owned a cigarette store in the town of Cowes on Phillip Island and Michael Rachelle owned a store in Kilmore, just north of Melbourne. They claimed their businesses were crippled by Coles’ sale of cut-price cigarettes.

The statement of claim accuses Coles of misuse of its market power by selling cigarettes from the big three tobacco companies British American Tobacco, Imperial Tobacco Australia and Phillip Morris, at below supply cost.

“[Coles] has used its substantial degree of market power in the market of acquiring and supplying tobacco products to consumers in Australia, for the purpose of or likely having the effect of substantially lessening competition in the market,” the statement claims.

The store owners claim this has aggrieved their customers as they believed the stores were overcharging them, which the business owners said resulted in damage to the reputations of the stores and a significant reduction in tobacco product sales.

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