Coles supermarket.
Coles supermarket. David Nielsen

ACCC sues Coles for threatening suppliers

THE consumer watchdog has launched legal action against Coles over allegations of unconscionable conduct including threatening suppliers if they did not meet the supermarket giants' demands.

As part of ongoing investigations into Coles' use of its significant market power, the Australian Competition and Consumer Commission launched legal action in the Federal Court against the company on Thursday.

ACCC chairman Rod Sims said the regulator was alleging the supermarket group "took advantage of its superior bargaining position by demanding money from suppliers that it was not lawfully entitled to".

But a statement from Coles, released Thursday, disputed the allegations, saying they "concern a limited number of dealings with five Coles suppliers three years ago".

"The allegations involve communications and negotiations about the failure to deliver products in the lead-up to the Christmas 2011 trading period, as well as waste and damage to products and the profitability of products."

It is the second action the regulator has taken against Coles this year, and is set down for a directions hearing in Melbourne later this month.