Woolworths accused of fake discounts after Coles ruling

Woolworths is accused of misleading shoppers with fake discounts, similar to Coles. The ACCC says this happened on hundreds of products over many months.
By Newsroom | Consumer Law, Australia |

The Federal Court has found Coles misled shoppers regarding discounts, a decision casting a long shadow over Woolworths' own promotional strategies. The Australian Competition and Consumer Commission (ACCC) alleges Woolworths employed "subtle magic," deliberately inflating prices before applying "Prices Dropped" tickets to create a false impression of savings. This conduct, involving hundreds of products over extended periods, is central to the ACCC's case, mirroring the claims made against Coles.

The ACCC's allegations against Woolworths are detailed and specific. The watchdog claims Woolworths executives intentionally relaxed internal controls designed to prevent misleading discounts. This strategy, allegedly implemented during a period of surging costs, aimed to boost sales by creating an illusion of value for consumers. The ACCC contends that Woolworths systematically misled shoppers by promoting discounts from recently inflated "was" prices, without disclosing the temporary price hikes. This practice, described as "Prices Dropped," is alleged to have deceived consumers into believing products were cheaper than they actually were compared to their regular, pre-spike pricing.

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Woolworths will be battening down the hatches after ACCC slays Coles’ false discounts - 1

The parallels between the cases against Coles and Woolworths are striking. The ACCC launched separate actions in the Federal Court against both supermarket giants, alleging misleading pricing practices on over 500 products. The ACCC's claims centre on the "Prices Dropped" promotion used by Woolworths and Coles' "Down Down" campaign. In both instances, the regulator asserts that temporary price spikes were engineered to establish a higher "was" price, making subsequent promotional prices appear more significant. These representations were displayed on pricing tickets in-store and online, often indicating a "was" price from the period of the short-term increase.

Pricing Integrity Under Fire

The court's findings against Coles serve as a significant warning to the retail sector. The ACCC's investigation into Woolworths began with social media monitoring and consumer feedback, escalating into a comprehensive probe utilising compulsory powers. Woolworths has acknowledged the period of "extraordinary inflation" post-Covid, stating a commitment to providing value. However, the ACCC's legal arguments suggest a deliberate strategy to leverage this period for increased sales through potentially deceptive discounting.

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Woolworths will be battening down the hatches after ACCC slays Coles’ false discounts - 2

The Scope of Allegations

The alleged conduct affected a wide range of everyday products, including well-known brands like Kellogg's Cereal, Arnott’s Tim Tam biscuits, Palmolive dishwashing liquid, and Sprite soft drink. The ACCC estimates that both Coles and Woolworths sold tens of millions of products using these alleged methods, generating substantial profits. The watchdog's case against Woolworths focuses on 266 products over a 20-month period, while the case against Coles identified 245 products over 15 months. The Federal Court's ruling on Coles could lead to penalties in the hundreds of millions of dollars, setting a precedent for the outcome of the Woolworths case.

Background and Context

The supermarket pricing strategies have been under intense scrutiny, particularly following a period of significant inflation. Consumer goodwill and brand loyalty, built up during the pandemic, have been eroded by rising costs and allegations of price gouging. Woolworths experienced a notable decline in sales growth and profits last year, partly attributed to increased price competition with Coles. The ongoing legal battles with the ACCC underscore a broader concern about the integrity of pricing practices within the grocery sector. While the judge in the Coles matter rejected the argument that inflation inherently made price fluctuations understandable to consumers, this aspect may be a point of contention in the Woolworths proceedings.

Read More: Coles Accused of Tricking Shoppers with Fake Sales

Frequently Asked Questions

Q: Why is Woolworths in court over discounts?
The ACCC claims Woolworths raised prices on hundreds of items and then put 'Prices Dropped' tags on them to make shoppers think they were getting a good deal. This is similar to a case against Coles.
Q: What did the ACCC say Woolworths did?
The ACCC says Woolworths used 'subtle magic' by intentionally increasing prices for a short time, then showing a discount from that higher price. They claim this happened on 266 products over 20 months.
Q: How does this compare to the Coles case?
The ACCC took similar action against Coles for its 'Down Down' campaign, claiming they also misled shoppers with temporary price hikes before showing discounts. The Federal Court found Coles did mislead shoppers.
Q: Which products were involved in the Woolworths case?
The ACCC's claims involve many everyday items, including Kellogg's Cereal, Arnott’s Tim Tam biscuits, Palmolive dishwashing liquid, and Sprite soft drink.
Q: What could happen to Woolworths?
The court's decision in the Coles case, which could result in millions of dollars in fines, may set a precedent for what happens to Woolworths. The ACCC believes both supermarkets sold tens of millions of products using these methods.