Coles will pay dairy farmers more than $5 million dollars after allegedly failing to fully pass on 10c per litre rise in the price of Coles branded milk.

An Australian Competition Consumer Commission investigation found Norco dairy farmers were shortchanged after the supermarket failed to pass on all of the levy added to the price of milk, which was praised for helping farmers out.

The supermarket giant introduced the levy under pressure from the public on March 19, but reduced the amount passed on to farmers from April 1.

ACCC chair Rod Sims told Gareth Parker Coles reached a deal with Norco to pay an extra 6.5c a litre for milk and then, they reduced the 10c a litre payment back to 3.5c.

The consumer watchdog began investigating the broken promise with the intention of taking Coles to court, but the supermarket agreed to pay the money before the dispute escalated.

Most farms will receive a lump sum of over $10,000 within a week, and going forward the full 10 cents per litre will be passed on.

In a statement, Coles said it does not agree with the ACCC, but has decided to pay farmers $5.25 million to dairy farmers.

“Coles is pleased to be able to provide additional support to Australian dairy farmers while we continue to work with industry and government stakeholders to find long-term solutions to ensure the sustainability of the Australian dairy sector,” the supermarket said in a statement.

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