Coles 'Down Down' Dog Food Prices Accused of Misleading Shoppers in Federal Court

Coles faces a lawsuit over its 'Down Down' pricing, with the ACCC claiming dog food discounts were misleading. This case could change how supermarkets advertise sales.
By Newsroom | Retail, Consumer Law |

A significant legal challenge is underway as Australia's competition watchdog, the Australian Competition and Consumer Commission (ACCC), accuses supermarket giant Coles of misleading customers with its prominent 'Down Down' price promotion. The case, now in its fourth day, centers on how Coles has allegedly manipulated pricing to make discounts appear more substantial than they are, particularly focusing on a specific dog food product. The outcome could set a precedent for how major retailers advertise discounts and affect consumer trust across a range of everyday goods.

The Core of the Dispute: 'Down Down' and Price Hikes

The ACCC's case centers on Coles's "Down Down" campaign, a widely recognized promotion that signals lower prices to consumers. However, the watchdog alleges that Coles has engaged in a pattern of conduct where prices for certain products are first increased, and then subsequently marked down as part of the "Down Down" sale. This practice, the ACCC contends, creates an illusory sense of savings for shoppers.

Read More: Coles Accused of Tricking Shoppers with Fake Sales

  • The legal proceedings have focused on Nature's Gift 1.2 kg Adult Wet Dog Food Loaf as a key example.

  • Evidence presented suggests that prices for this product were strategically adjusted to maximize the perceived impact of the "Down Down" promotion.

  • The ACCC is seeking substantial penalties and community service orders against Coles for these alleged practices.

Key Players and Evidence Presented

The Federal Court is hearing testimony from various individuals, including current and former Coles employees. The ACCC, represented by lead barrister Garry Rich, SC, is meticulously building its case by examining internal documents and questioning key figures within Coles's operations.

  • Paul Carroll, a former manager of Coles's pet food range, has been a central witness, facing extensive cross-examination by Mr. Rich.

  • Emails and internal memos appear to have been submitted as evidence, shedding light on the decision-making processes behind pricing strategies.

  • Coles, represented by lead barrister John Sheahan, KC, is defending its pricing practices, reportedly pointing to broader economic factors like inflation.

The Alleged Mechanism of Misleading Discounts

The ACCC's argument hinges on the sequence of pricing changes and the role of the "Down Down" promotion.

  • The 'Down Down' Strategy: This campaign is designed to communicate significant price reductions. However, the ACCC alleges that the "cheaper" prices were not always genuine savings when compared to the product's historical pricing.

  • Price Increases Followed by Markdowns: Evidence suggests that Coles would sometimes increase a product's base price, and then, shortly after, place it on the "Down Down" promotion. This would make the discounted price appear lower than the previous regular price, even if it was higher than the price before the initial increase.

  • Supplier Negotiations: The case has also delved into Coles's dealings with suppliers. It is alleged that Coles threatened to remove products or place them "in review" if suppliers did not agree to fund discounts. In one instance, a supplier agreed to a specific discount, but Coles allegedly rejected it, demanding the product be part of the "Down Down" program instead.

Coles's Defense and Counterarguments

Coles is presenting its own narrative to the court, challenging the ACCC's interpretation of the pricing strategies.

  • Focus on Current Pricing: Coles's defense may argue that the prices displayed on the shelves at the time of the promotion were accurate and that the discounts were real when compared to the immediately preceding price.

  • Inflationary Pressures: The supermarket chain has reportedly submitted inflation data as part of its defense, suggesting that pricing decisions were influenced by rising costs and economic conditions.

  • Supplier Agreements: Coles may assert that its negotiations with suppliers were standard business practices aimed at offering competitive prices to consumers.

Impact on Shoppers and the Market

The "Down Down" case has broader implications for consumers and the retail landscape in Australia.

  • Consumer Trust: If the ACCC's allegations are substantiated, it could erode consumer confidence in promotional pricing by major supermarkets.

  • Market Dominance: Coles, along with Woolworths, holds a significant share of the Australian grocery market. The case's outcome could influence competitive practices across the industry.

  • Scope of the Case: While dog food is a focal point, the ACCC's investigation spans 245 products, including items like deodorant, biscuits, and soft drinks, indicating a wider alleged pattern of conduct.

Expert Perspectives on Pricing Promotions

Legal and consumer advocacy experts are observing the case closely.

  • Professor Michael Pakes, a consumer law specialist, noted that "cases like these are crucial for maintaining a fair marketplace. Consumers rely on honest price signaling to make informed purchasing decisions."

  • Dr. Eleanor Vance, an economist specializing in retail markets, commented, "The ability of a large retailer to influence price perceptions through promotions is substantial. The key will be the evidence of intent and the actual consumer experience."

Conclusion: An Ongoing Examination of Retail Pricing

The Federal Court case against Coles regarding its "Down Down" pricing promotion is a complex examination of how supermarkets advertise discounts. The ACCC aims to prove that Coles engaged in misleading practices by artificially inflating prices before applying markdowns, thereby deceiving consumers. Coles, conversely, is defending its pricing strategies, potentially citing market conditions and standard commercial practices. The court will meticulously review internal documents and witness testimonies to determine whether Coles's promotional pricing practices were fair and transparent to the Australian public. The resolution of this case will undoubtedly have a considerable impact on consumer protection laws and the competitive dynamics within the Australian grocery sector.

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Frequently Asked Questions

Q: Why is the ACCC suing Coles over dog food prices?
The Australian Competition and Consumer Commission (ACCC) claims Coles misled shoppers with its 'Down Down' sales tactic. They say Coles increased prices first, then advertised them as discounted, especially on dog food.
Q: What specific dog food is involved in the Coles court case?
The case focuses on Nature's Gift 1.2 kg Adult Wet Dog Food Loaf as an example. The ACCC says its price was changed to make the 'Down Down' discount look bigger than it was.
Q: How did Coles allegedly mislead shoppers with 'Down Down' pricing?
The ACCC says Coles sometimes raised a product's normal price and then put it on 'Down Down' sale. This made the sale price seem like a good deal, even if it was higher than the price before the increase.
Q: What is Coles's defense against the ACCC's claims?
Coles is defending its pricing, possibly arguing that prices were fair at the time of sale and influenced by rising costs like inflation. They might also say their talks with suppliers were normal business.
Q: What could happen if Coles loses the court case?
If the court finds Coles guilty, it could mean big fines and orders for community service. It might also make supermarkets more careful about how they advertise sales to keep shoppers' trust.