Supermarket giant Coles has agreed to make a settlement with the competition watchdog in relation to charges of unconscionable conduct involving suppliers.

Coles and the competition watchdog went to the Federal Court on Monday offering to make a settlement in which Coles would pay $10 million in fines and set up a process for suppliers to seek refunds on payments they should not have made.

Lawyers for the Australian Competition and Consumer Commission and Coles are at the Federal Court after agreeing to a settlement they hope will resolve two separate legal battles.

The ACCC took legal action against Coles earlier in 2014, with the watchdog accusing the supermarket of unconscionable conduct over the way it sought rebates from suppliers.

It also alleged Coles had engaged in unconscionable conduct against certain suppliers in relation to claims for various payments, including payments for purported profit gaps, waste and markdowns, and late and short deliveries.

Coles rejected the allegations.

In a statement on Monday, the ACCC said both parties were seeking consent orders from the Federal Court to settle the matters.

The ACCC said Coles had now admitted to unconscionable conduct with a number of suppliers in 2011, which contravened consumer laws.

Both parties are seeking consent orders from the court in relation to the admission, as well as penalties.

“The parties will also advise the court that, as part of the resolution of the proceedings, Coles will give an enforceable undertaking to the ACCC which provides for an independent review of the eligibility of suppliers referred to in both proceedings for possible refund of certain payments made to Coles by those suppliers,” the ACCC said in a statement on Monday.

“It is a matter for the court as to whether it is prepared to make the consent orders sought by the parties.”

The independent arbiter who will decide whether suppliers should be refunded by Coles will be former Victorian premier, Jeff Kennett.

AAP