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Former Woolies director denies ACCC claims

AAP logoAAP 1/11/2016 Andi Yu

A former Woolworths director has disputed the ACCC's allegations that asking suppliers for large extra sums of cash to make up for lost profits was illegal, telling a Sydney court that the practice was "perfectly normal".

The consumer watchdog has taken the supermarket giant to the Federal Court over its Mind The Gap program, which it alleges involved Woolworths demanding suppliers compensate $11 million of losses by pressuring them to make non-contractual extra payments.

The payments ranged in size from $4,291 to $1.4 million and Woolworths ultimately received $18.1 million from suppliers - more than their targeted amount, the ACCC alleges.

The former commercial director of Woolworths, Alex Dower, told the court on Tuesday that Woolworths never demanded anything from its suppliers, but that "asks" of cash to address profit margin problems was "normal".

"I would never demand a Mind the Gap payment from anyone," he said.

"Woolworths had no contractual right to any Mind The Gap payment did it?" ACCC lawyer Norman O'Bryan SC asked.

"I think that is correct," Mr Dower replied.

"The payments were effectively gifts from the suppliers to Woolworths?"

"Absolutely not."

Mr Dower said extra cash paid was simply part of "ongoing commercial negotiations", which had been Woolworths' practice for years.

Mr O'Bryan asked if it was possible for suppliers to ask for extra payments if they outperformed Woolworths' expectations - a kind of Mind the Gap payment in reverse.

Mr Dower said that suppliers often asked for this but he was vague about whether Woolworths ever gave them cash.

Earlier, Woolworths lawyer Cameron Moore SC disputed the ACCC's accusation that the supermarket engaged in "unconscionable" conduct with its suppliers.

"There was nothing unique or unordinary about the Mind The Gap program," he said.

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