Coles Accused of Tricking Shoppers with 'Down Down' Prices

Coles is facing a court case. The Australian consumer watchdog says the supermarket's 'Down Down' sales trick people into thinking they are saving money. The court will decide if this is true.
By Newsroom | Consumer Rights, Australia |

A significant legal challenge is underway in the Federal Court, where Australian supermarket giant Coles stands accused by the Australian Competition and Consumer Commission (ACCC) of engaging in misleading pricing practices. The core of the dispute centers on Coles' widely recognized "Down Down" promotion, which the consumer watchdog contends creates a false impression of genuine savings for shoppers. The outcome of this case, expected to unfold over several days, could have substantial implications for consumer trust and pricing transparency within the Australian grocery sector, an industry dominated by Coles and its main competitor.

The ACCC has launched a major legal case against Coles, alleging that the supermarket has misled consumers regarding its "Down Down" discounts. The watchdog claims that over a relevant period, Coles increased the prices of numerous products for a short duration before applying the "Down Down" promotion. This strategy, the ACCC argues, results in the discounted price being no lower, and often higher, than the original price before the temporary inflation.

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  • Timeline: The legal battle has now entered the Federal Court, with hearings commencing recently. The ACCC has been scrutinizing supermarket pricing practices during the ongoing cost-of-living crisis.

  • Key Players:

  • Coles: The supermarket chain accused of misleading pricing.

  • ACCC: The Australian Competition and Consumer Commission, acting as the plaintiff.

  • Federal Court: The venue for the legal proceedings.

  • Nature of Allegations: The ACCC asserts that Coles manipulated prices to create the appearance of significant savings, thereby misleading the ordinary consumer about the value of the "Down Down" promotion. This alleged conduct falls under the purview of Australian Consumer Law.

Evidence Presented by the ACCC

The ACCC's case relies on the contention that the "Down Down" pricing strategy creates a deceptive impression of savings.

  • The watchdog alleges that Coles increased prices on a number of items for a brief period before advertising them with a "Down Down" discount.

  • =The ACCC contends that the advertised promotional price was frequently the same as, or even higher than, the regular price that was in place before the temporary price increase.=

  • Evidence cited includes internal Coles documents that reportedly show policy changes related to the discount program preceding the alleged misleading conduct.

  • The ACCC has identified 245 products as part of its investigation, with the court focusing on a sample including items like Colgate toothpaste, Sanitarium Weet-Bix, Rexona deodorant, Arnott’s Shapes, and Coca-Cola.

  • =The ACCC argues that this practice distorts the ordinary consumer's perspective regarding price reductions.=

Coles' Defense and Counterarguments

Coles has vehemently denied the ACCC's allegations, presenting its own interpretations of the pricing strategies and the legal case itself.

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  • Coles argues that the price increases were a genuine response to surging costs and inflationary pressures, exacerbated by a high volume of supplier requests for cost adjustments.

  • The supermarket contends that its "Down Down" pricing reflects a genuine discount and that customers are generally aware of price movements before making purchases.

  • =Coles suggests the ACCC's case is overly complex and that providing full price history on tickets would be impractical and confusing for consumers.=

  • Coles' legal team has pointed to alleged flaws in the ACCC's case, asserting that for many items, prices were not increased for an extended period.

The Meaning of 'Down Down'

The central point of contention revolves around the interpretation and consumer perception of Coles' "Down Down" promotion.

Coles downplays meaning of 'Down Down' pricing in federal court case - 1

  • ACCC's View: The watchdog argues that the promotion's implication is a price drop from a previously established, regular price. The ACCC asserts that the advertised price, when viewed against the backdrop of the preceding temporary inflation, does not represent a true saving. =The watchdog views the promotion as a "half-truth apt to mislead consumers."=

  • Coles' View: Coles maintains that "Down Down" signifies a real discount and that its customers understand this. The company suggests that adding extensive price history information would make pricing displays too difficult to comprehend for shoppers.

Potential Ramifications and Penalties

Should Coles be found to have contravened consumer law, the consequences could be severe.

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  • Financial Penalties: Coles faces the prospect of significant fines, with suggestions that these could reach hundreds of millions of dollars.

  • Reputational Damage: The case carries a substantial reputational risk for Coles, potentially impacting consumer confidence in its pricing practices.

  • Market Impact: Given that Coles and Woolworths collectively hold approximately two-thirds of the Australian grocery market share, the outcome of this case could set a precedent for pricing transparency and competition within the sector.

  • Other Remedies: The ACCC is also seeking community service orders against Coles.

Expert Perspectives

Former ACCC Commissioner, Professor Allan Fels, has weighed in on the case, offering a perspective on the potential justifications for price increases versus the impact on consumers.

"Quite possibly the price increases were genuinely needed to cover inflation, but that is not a defence to allegations that consumers were misled and deceived." - Professor Allan Fels

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Fels highlights that even if inflationary pressures necessitate price hikes, this does not absolve a company from accusations of misleading consumers about discounts.

Conclusion and Next Steps

The Federal Court is currently hearing evidence in a case that could redefine the parameters of supermarket promotional pricing in Australia. The ACCC's allegations of deliberately misleading "Down Down" discounts are being countered by Coles' defense that price adjustments were driven by genuine cost pressures and that the promotions offer real savings. The court's ultimate decision will hinge on whether the supermarket's pricing strategies are deemed to have created a misleading impression for the reasonable consumer.

The court will hear evidence over several days to determine if Coles' promotional behaviour breached consumer law. The final judgment will clarify the legality of such discount strategies and the extent to which supermarkets can leverage temporary price hikes in their promotional messaging.

Sources Used:

Frequently Asked Questions

Q: What is the 'Down Down' sale?
It is a sale by Coles where prices are advertised as going down.
Q: What does the ACCC say?
The ACCC says Coles raised prices before the sale to make the discount look bigger than it was. They say this is misleading.
Q: What does Coles say?
Coles says the price increases were because their costs went up. They also say customers know prices change and the sales are real savings.
Q: What could happen to Coles?
Coles could be fined a lot of money and their reputation could be hurt if they lose the case.