Coles is accused of hiking petrol prices to cover the cost of cheap milk. Picture: Adam Ward Source: Herald Sun
COLES will be forced to answer whether it is conning customers by hiking up the cost of petrol to pay for slashed milk prices.
The supermarket giant will be quizzed by a Senate committee about claims by a rival independent chain it may have lifted petrol rates to cover the cost of cutting the price of milk.
Foodworks chief executive Russell Markham claimed in his submission to a Senate inquiry yesterday that Coles couldn't sell milk at cut prices without making up the lost income in other areas.
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"I am aware that fuel can be offset against grocery prices and an ex-employee of Coles has told me that," he said.
Coles hit back, saying there was no evidence for the claim.
"We do not cross-subsidise between our supermarket and petrol businesses," spokesman Jim Cooper said.
"All of our price cuts stand alone and are genuine. And we would note that our fuel prices are competitive within the fuel market, which they obviously would not be if they were being used to subsidise food prices."
The price of petrol at Coles Express service stations in inner-Melbourne was up to 143.9c yesterday, according to petrol monitoring website MotorMouth.
The Senate economics committee also heard fresh milk would become a luxury. Long-life milk would be used in the average Australian home if supermarket price wars went unchecked.
Coles came under fire after dairy organisations said the industry would crumble if "unsustainably" low prices of milk were allowed to continue.
Australian Dairy Farmers vice-president Christopher Griffin told the hearing Coles was "not to be trusted" after it slashed the cost of milk to $1 a litre.
"It's simply not sustainable," he said.
"Dairy farmers do not or should not trust Coles - and neither should its customers."
Independent senator Nick Xenophon said outside the inquiry that Coles was showing contempt for the Senate, farmers and consumers by not making a submission explaining its actions.
"Woolworths let the cat out of the bag last night when . . . they said that this price war is simply unsustainable, that it will have a huge impact on the dairy industry," he said.
wrighta@heraldsun.com.au
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