The letter dated September 21 from interim chief David Mallinson sought responses by this Thursday and said “the revised pricing will supersede all other pricing agreements with your organisation which apply to the relevant goods or services”.
“To ensure confidentiality and to remove potential confusion we have asked all MG representatives not to discuss any aspect of this project directly with vendors and business partners.
“We understand that this request will in some cases present a significant impost, however we ask for your understanding and support given the challenging environment we face and our aim of ultimately improving poor pricing for farmers,” it added.
The letter comes as the Australian Competition and Consumer Commission is still investigating whether the co-op breached unconscionable conduct rules in slashing milk prices to farmers earlier this year.
Mallinson asked suppliers to send a list of items they supply the co-op (MGC), the present prices and what sort of reductions can be made.
The letter is part of the co-op’s Rapid Cost Reduction program which is aimed to save $50 million to $60m.
One supplier confided the letter was a “serious threat”, implying that if you did not comply then your future business with MG would be at risk.
The supplier described it as “corporate bullying”.
If Coles and Woolworths engaged in this sort of behaviour there would be an uproar, but MG is not the only company which has sought help from its suppliers.
It is somewhat surprising for Murray Goulburn to be sending the letter while the co-op is still waiting to see if the ACCC is planning to take legal action against it for its dealings with farmer suppliers.
The letter went to a range of other suppliers.
It apologised for the short time given to come up with the aid package and noted: “MG will then review your proposal and if the revised pricing is acceptable, will confirm our acceptance in writing.”
The letter is silent on what happens if the proposal is not acceptable to MG.
Just how the ACCC will react depends in part on the relative size of the vendors and MG, and just what happens next.
Source: TheAustralian
Link: http://www.theaustralian.com.au/business/opinion/john-durie/murray-goulburn-writes-to-suppliers-seeking-price-cuts/news-story/ced123835acb34a833a97b6f0ae9193d
