Coles Accused of Misleading Shoppers on 245 Product Prices in Court Case

Coles is in court for allegedly misleading shoppers on 245 product prices. This is a big case that could change how supermarkets advertise sales.
By Newsroom | Business, Consumer Affairs |

A major Australian supermarket chain, Coles, is currently involved in a significant legal battle with the Australian Competition and Consumer Commission (ACCC). The ACCC alleges that Coles engaged in "utterly misleading" pricing practices, deceiving customers about discounts on a wide array of products. This case, currently being heard in the Federal Court, could set a precedent for industry-wide sales promotions and may result in substantial penalties for Coles.

The Core of the Dispute: "Down Down" Deals Under Scrutiny

The ACCC's central argument is that Coles falsely advertised discounts, creating the impression of savings for consumers when, in many instances, the promoted prices were no higher than, or even higher than, the product's previous regular price. This alleged deception involved a vast number of items, with the ACCC citing 245 different products as examples. These include everyday essentials like toothpaste, soft drinks, shampoo, band-aids, laundry powder, dog food, and biscuits.

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The ACCC alleges that Coles claimed prices were going down when they were going up. This has distorted the perspective of the ordinary consumer.

The supermarket chain is defending these claims, asserting that the discounts were genuine and represented a real reduction from a previous price. Coles also points to external factors, such as rising costs from suppliers and general inflation, as reasons for price changes.

Coles manager admits chain only increased product’s price to claim discount - 1

Timeline and Key Events

The legal proceedings are ongoing, with the case set to continue in the Federal Court over the coming weeks. Key moments and claims include:

  • ACCC's Allegations: The consumer watchdog contends that Coles misled shoppers by promoting prices that were not true discounts. A former Coles manager, Rebecca Thompson, was questioned by the ACCC about the pricing of Arnott's Shapes Multipack.

  • Coles' Defence: The supermarket argues that supplier requests for price increases and inflationary pressures led to the price adjustments being scrutinized. Coles states it has been assisting Australians in managing grocery costs.

  • Examples Cited: The ACCC has provided specific examples, including Arnott's Shapes biscuits and Nature's Gift wet dog food, where the promoted price allegedly did not reflect a genuine saving compared to the previous regular price.

  • Industry Impact: The case is considered a significant test for sales promotion practices across the entire grocery sector, potentially affecting other major retailers like Woolworths, which faces similar allegations.

Evidence Presented and Claims

The ACCC's case hinges on the idea that consumers were led to believe they were getting a bargain, but this perception was manufactured.

  • Promoted Prices vs. Regular Prices: The watchdog claims that for many products, the price displayed as discounted was either the same as or higher than the prior "regular" price.

  • "Illusory" Discounts: Legal counsel for the ACCC, Garry Rich SC, has described these promotions as "illusory" and "utterly misleading," suggesting they were a half-truth designed to deceive.

  • Manager's Admission (Circumstantial): A former Coles manager reportedly admitted that a product's price was increased specifically to be able to claim a discount later. Did this represent an isolated error or a systemic practice?

  • Coles' Counter-Argument: Coles contends the ACCC is over-analyzing consumer perception and that their discounts were legitimate based on comparison to previous prices. They also challenge the ACCC's definition of a "regular price" and the timeframe required for a discount to be valid.

Deep Dive: The Inflationary Defense

One of the central arguments presented by Coles is that external economic factors, particularly inflation and increased supplier costs, necessitated price adjustments.

Coles manager admits chain only increased product’s price to claim discount - 2

  • Supplier Cost Increases: Coles asserts it received a large number of requests from suppliers to raise prices. These increases were then passed on to consumers through retail pricing.

  • Inflationary Pressures: The supermarket maintains that the period in question saw significant inflation, and their promotional strategies were undertaken against this backdrop, with the aim of helping customers manage rising grocery bills.

  • ACCC's Rejection: The ACCC, however, does not accept this as a valid defence against allegations of misleading consumers. Garry Rich SC stated that while price increases might have been needed for inflation, this does not excuse misleading consumers about discounts. Professor Fels, a former ACCC chairman, echoed this sentiment, stating that even genuine price increases do not justify claims of deceptive practices.

Deep Dive: The Consumer's Perspective

The ACCC's case strongly emphasizes the impact on the ordinary consumer, arguing that their purchasing decisions are influenced by the perception of value and savings.

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  • Distorted Perception: The ACCC claims that Coles' pricing strategies created a false sense of getting a good deal, thereby distorting how consumers understood the market.

  • "Down Down" Campaign: The "Down Down" campaign, a well-known promotional tool used by Coles, is at the heart of the ACCC's concern, suggesting the very name implies a genuine and consistent price reduction.

  • Focus on "Ordinary Consumer": The ACCC's legal argument relies on how an average shopper would interpret the pricing and promotional information presented. Coles, in turn, questions the ACCC's detailed examination of a shopper's mindset.

Expert Analysis

Legal experts and consumer advocates are closely watching the case, noting its potential ramifications.

  • Professor Fels commented that even if price increases were genuinely needed due to inflation, it does not provide a defence for misleading consumers. He highlighted the significant reputational risk for Coles, in addition to potential fines that could reach hundreds of millions of dollars.

  • The case is seen as a "test case" for industry practices, meaning its outcome could influence how supermarkets and other retailers conduct promotions in the future.

Conclusion and Implications

The Federal Court case between Coles and the ACCC presents a complex interplay of pricing strategies, consumer protection law, and economic pressures. The ACCC is seeking substantial penalties and community service orders against Coles.

  • Key Findings Sought: The court will determine whether Coles' promotional pricing practices for the 245 products constituted misleading conduct under Australian consumer law.

  • Potential Penalties: If found guilty, Coles could face significant financial penalties, with potential fines running into the millions, and significant reputational damage.

  • Broader Impact: The outcome will likely clarify the rules around supermarket discounts and promotions, potentially forcing industry-wide changes in how prices are advertised and managed.

  • Next Steps: The case is scheduled to continue in the Federal Court, with further witness testimonies and internal documents to be examined.

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Frequently Asked Questions

Q: Why is Coles in court with the ACCC?
Coles is in court because the Australian Competition and Consumer Commission (ACCC) says the supermarket misled shoppers about discounts on 245 different products. The ACCC claims the advertised sale prices were not real savings.
Q: What products are involved in the Coles court case?
The ACCC says 245 products had misleading prices. These include everyday items like toothpaste, soft drinks, shampoo, band-aids, laundry powder, dog food, and biscuits.
Q: How did Coles allegedly mislead shoppers about prices?
The ACCC claims Coles advertised prices as 'down' or discounted when, in many cases, the price was the same as or even higher than the product's previous normal price. This made shoppers think they were getting a good deal when they weren't.
Q: What is Coles' defence in the court case?
Coles says the discounts were real and that price changes were due to rising costs from suppliers and general inflation. They argue they have been helping customers manage grocery costs.
Q: What could happen if Coles loses the court case?
If Coles loses, they could face large fines and damage to their reputation. The case is also important because it could change how all supermarkets advertise sales and discounts in the future.
Q: When is the Coles court case happening?
The court case is currently happening in the Federal Court and is expected to continue over the next few weeks with more evidence being presented.