The Australian Competition and Consumer Commission (ACCC) has initiated legal action against Coles and Woolworths, alleging that their prominent "Down Down" and "Prices Dropped" discount campaigns misled consumers. The core of the accusation centers on claims that temporary price increases were used to create inflated "was" prices, making subsequent promotional prices appear more significant than they truly were. This development impacts hundreds of common grocery items and is being closely watched by consumer advocacy groups and regulators during a period of heightened cost-of-living concerns.
Background to the ACCC Action
In late September 2024, the ACCC announced separate legal proceedings against Coles Supermarkets Australia Pty Ltd and Woolworths Group Limited. The regulator contends that both supermarket chains engaged in conduct that was misleading or deceptive, and made false or misleading representations regarding their pricing strategies. These actions allegedly breached sections 18 and 29(1)(i) of the Australian Consumer Law, which is part of the Competition and Consumer Act 2010 (Cth).
Read More: BrewDog May Be Sold, Investors Worry About Their Money
The ACCC's focus on supermarket pricing is a stated enforcement priority, particularly concerning food and grocery items, as the cost of living continues to be a significant issue for many households. The legal challenges come at a time when consumers are reportedly more budget-conscious, with surveys indicating a growing trend of early Christmas shopping and a preference for home-brand products over national brands.
The Allegations: A Pattern of Inflated Discounts
The ACCC's core allegation is that both Coles and Woolworths engaged in a deliberate practice of manipulating prices to enhance the perceived value of their promotions.
Pre-Planned Price Spikes: It is alleged that, in numerous instances, both companies planned to implement a temporary price increase on certain products.
Establishing a Higher "Was" Price: This temporary price hike served the purpose of establishing a higher "was" price.
Subsequent Promotion: Following this price spike, the products would then be featured in "Down Down" (Coles) or "Prices Dropped" (Woolworths) promotions.
Misleading Representation: The ACCC argues that the displayed promotional price, while potentially lower than the spiked "was" price, was often equal to or even higher than the product's regular price before the temporary increase. This, the regulator claims, misrepresented the actual savings available to consumers.
Read More: Australian Senator's Remarks About Parliament Investigated
The representations were reportedly made through pricing tickets displayed both in-store on shelves and online. These tickets typically showed the "was" price, alongside the promotional price and the date that the higher "was" price was in effect.
The ACCC alleges a systematic use of temporary price hikes to create misleading discount promotions across hundreds of products over extended periods.
| Supermarket | Alleged Conduct | Number of Products Involved | Duration of Alleged Conduct |
|---|---|---|---|
| Woolworths | Misleading "Prices Dropped" promotions | 266 | 20 months |
| Coles | Misleading "Down Down" promotions | 245 | 15 months |
Evidence Presented by the ACCC
The ACCC's case is built upon the alleged pattern of conduct by both supermarket chains.
Specific Instances: The regulator points to specific examples where products were subjected to price increases of at least 15 percent for brief durations.
Purpose of Price Spikes: It is alleged that these spikes were implemented specifically to create a higher baseline "was" price for subsequent promotions.
Comparison to Regular Price: The crucial element of the ACCC's claim is that the promotional price was often not a genuine discount relative to the product's regular price, but rather a reduction from an artificially inflated temporary price.
Legal Basis: The ACCC cites breaches of Australian Consumer Law concerning misleading and deceptive conduct and false or misleading representations about prices.
Read More: Donnelley Financial Solutions to Share Earnings Soon
The regulator has stated that while it does not set supermarket prices, it is empowered to take action against companies that contravene consumer protection laws.
Consumer Sentiment and Market Context
The legal action against Coles and Woolworths occurs against a backdrop of heightened consumer sensitivity to pricing.
Budgetary Pressures: Consumers are reportedly facing financial pressures, with a significant portion beginning their Christmas shopping early and carefully managing their budgets.
Shift to Home Brands: There is an observable trend towards home-brand products, which are selling at a faster rate and contributing a substantial portion to overall supermarket sales.
Competitive Landscape: Surveys of grocery prices indicate that discounters like Aldi are perceived as offering the lowest prices for essential items.
Coles' Christmas Offerings: In parallel with the legal proceedings, Coles has been promoting an expanded range of Christmas food and drink items, aiming to cater to consumers celebrating holidays at home.
Coles' Response: "Genuine Savings"
In response to the scrutiny, Coles has maintained that its "Down Down" specials are intended to offer genuine savings to customers. While the company has not directly commented on the ACCC's specific allegations regarding price manipulation, the general sentiment from Coles leadership has been to affirm the integrity of their promotional strategies. The company's focus remains on meeting consumer demand, particularly with the festive season approaching and an increase in home-based celebrations.
Analysis: Regulatory Scrutiny of Retail Pricing
The ACCC's action against Coles and Woolworths underscores the increasing regulatory attention on retail pricing practices, especially within the grocery sector. The use of "was" and "now" pricing strategies has long been a subject of debate, with regulators seeking to ensure that advertised discounts accurately reflect genuine savings for consumers.
Read More: Hawthorn and Geelong Play Practice Game
Precedent: The ACCC has pursued similar cases in the past, such as action against Kogan.com for allegedly increasing prices immediately before offering discounts. The outcome of these cases can set important precedents for how such pricing tactics are viewed under consumer law.
Consumer Trust: The allegations, if proven, could have significant implications for consumer trust in major supermarket brands and their promotional claims.
Enforcement Priorities: The ACCC's explicit focus on supermarket pricing signals a commitment to policing potential anti-competitive or misleading conduct in a sector that directly impacts household budgets.
Conclusion and Next Steps
The ACCC has formally launched legal proceedings against Coles and Woolworths, alleging misleading pricing practices through their "Down Down" and "Prices Dropped" promotions. The regulator contends that temporary price increases were strategically used to inflate "was" prices, thereby making promotional savings appear more substantial than they actually were.
Read More: InVideo and Google Cloud Work Together to Make Videos with AI
Legal Proceedings: The cases will proceed in the Federal Court of Australia.
Burden of Proof: The ACCC will need to demonstrate to the court that the alleged conduct constitutes misleading or deceptive behavior under the Australian Consumer Law.
Potential Penalties: If found guilty, Coles and Woolworths could face significant financial penalties.
Consumer Impact: The outcome will be of considerable interest to consumers, potentially influencing how promotional pricing is presented and understood in the future.
Further details regarding the specific evidence and arguments presented by both sides will emerge as the court proceedings unfold.
Sources
ACCC. (2024, September 23). ACCC takes Woolworths and Coles to court over alleged misleading ‘Prices Dropped’ and ‘Down Down’ claims. Australian Competition and Consumer Commission. https://www.accc.gov.au/media-release/accc-takes-woolworths-and-coles-to-court-over-alleged-misleading-prices-dropped-and-down-down-claims
Smh.com.au. (2024, October 10). ‘Down Down’ specials aim to be genuine savings, says Coles boss. The Sydney Morning Herald. https://www.smh.com.au/business/companies/down-down-specials-aim-to-be-genuine-savings-says-coles-boss-20241010-p5kh9k.html
Holding Redlich. (2024, September 24). Down, down… to court we go: Coles and Woolworths in hot water over 'price drops'. Holding Redlich. https://www.holdingredlich.com/down-down-to-court-we-go-coles-and-woolworths-in-hot-water-over-price-drops
PS News. (2024, September 23). Woolworths and Coles taken to court over ‘Prices Dropped’ and ‘Down Down’ marketing campaigns. PS News. https://psnews.com.au/woolworths-and-coles-taken-to-court-over-prices-dropped-and-down-down-marketing-campaigns/144760/
Read More: Kalyn Ponga Stays With Knights Until 2027, But Questions Remain
