WESFARMERS could face legal action after denying shareholders the chance to air grievances over the milk discounting war, according to Independent Senator Nick Xenophon.
Last Friday Wesfarmers rejected a shareholders’ request for an extraordinary general meeting (EGM) where they planned to demand an explanation about Coles’ controversial $1 a litre milk pricing strategy and seek an immediate end to the manoeuvre.
Senator Xenophon, unimpressed by Wesfarmers’ refusal, is now threatening to seek intervention from the Australian Securities and Investments Commission (ASIC).
“Coles could well face a legal challenge,” he said.
“I will be raising this issue with ASIC during Senate estimates hearings in the next two weeks, because the ability for shareholders to call for an EGM under the Corporations Act is a mechanism to enable shareholders’ grievances to be heard.
“The arrogance of these jokers is extraordinary.”
Australian Dairy Farmers (ADF) vice president, Adrian Drury, said Wesfarmers had acted with “extreme arrogance” in blocking the shareholders’ meeting.
He said Wesfarmers’ refusal to even discuss the Coles chain’s “down-down” campaign showed no respect for shareholders, and total disregard for dairy farmers’ livelihoods and for customers who could be hit with higher prices when Coles sought to recoup its losses.
The controversy started in late January when the supermarket giant slashed its home brand milk to $1 a litre and other supermarket chains followed suit soon after.
On May 10, disgruntled shareholders sent a letter to Bob Every, the chairman of Coles’ parent company, Wesfarmers, seeking the EGM.
The EGM petition was signed by 146 shareholders.
Mr Drury said Wesfarmers responded by calling its lawyers to block free discussion of Coles’ “cut-throat campaign”.
Wesfarmers corporate affairs manager, Alan Carpenter, said the company’s managing director, Richard Goyder, had offered to meet with the ADF to discuss the matter but had not received a reply, as of Monday.
Dr Every said the Wesfarmers board had independent legal advice that the ADF’s proposed resolution related to management matters and would be legally invalid.
He understood the Coles’ milk and dairy pricing strategy was of concern to the ADF and shareholders who wanted the general meeting, and he had invited them to discuss their concerns with Mr Goyder.
But Mr Drury said Wesfarmers had missed an opportunity to explain to farming families why it was letting Coles employ its marketing tactics.
“Coles hasn’t been upfront with the public on its tactics and the impact of its campaign on Australia’s dairy industry,” he said.
Now its parent company was joining in to shut down discussion.
“These price cuts are unsustainable and the plain fact is milk at $1/litre does not bring in enough money to support farmers, processors and retailers, and Coles knows it.”
Federal Opposition agriculture spokesman, John Cobb, said while Coles had said it wasn’t doing anything wrong “unfortunately, (by refusing to face shareholders) they seem to be insinuating they do have something to hide.”
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