The Australian Competition and Consumer Commission’s (ACCC) allegations that Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts come as retailers head into their most promotional period of the year and serve as a warning to the wider industry. The ACCC has alleged that the two supermarkets offered certain products at a regular price for at least 180 days before increasing the price of the product by at least 15 per cent for a relatively
ly short period of time – later placing those products on their ‘Prices Dropped’ or ‘Down Down’ programs.
“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products,” ACCC Chair, Gina Cass-Gottlieb, said in a statement.
“However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price,” she added.
Woolworths is alleged to have made false or misleading representations to consumers about the prices of 266 products between September 2021 and May 2023, including Arnott’s Tim Tams biscuits, Energizer batteries, Listerine mouthwash, Moccona coffee capsules, and Uncle Tobys muesli bars.
Meanwhile, Coles is alleged to have made false or misleading representations to consumers about the prices of 245 products between February 2022 and May 2023, including Bega cheese, Cadbury chocolates, Coca-Cola soft drink, Colgate toothpaste, Fab laundry liquid, Karicare formula, Libra tampons, and Sanitarium Weet-Bix.
This isn’t the first time Woolworths and Coles have been accused of misrepresenting discounts by a consumer watchdog – earlier this year consumer advocacy group Choice found Coles and Woolworths’ specials to be unclear.
“Our nationally representative research revealed that on average 1 in 4 people found it difficult to identify if certain supermarket labels represented a true discount or not. ‘Down Down’ labels at Coles and ‘Prices Dropped’ labels at Woolworths were among those that caused confusion for consumers,” said Rosie Thomas, director of campaigns at Choice.
“We’re calling for greater transparency of historical supermarket pricing data, as easier access to data on supermarket price changes over time would have made it much harder for the supermarkets to get away with this kind of behaviour for so long,” she added.
The precedent
Coles and Woolworths are not the only retailers to be scrutinised over their promotional practices. In July 2020, the ACCC brought a case to the Federal Court alleging Kogan made false or misleading representations about a 10 per cent price reduction promotion.
“We brought this case because we were concerned that the advertised price reductions were not genuine savings,” Rod Sims, who was then chair of the ACCC, said at the time.
“Many consumers who took up the offer on one or more of the 600 or so products in many cases actually paid the same as, or more than, what they would have paid immediately before and after the promotion,” he added.
Due to the proceedings brought by the ACCC in May 2019, the Federal Court found that Kogan breached the Australian Consumer Law by making false and misleading representations.
“All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion and that any promised savings are genuine,” said Sims at the time.
The response
The “Big Two” are taking different legal approaches to the allegations. Coles intends to “defend the proceedings” whereas Woolworths claims the legal action taken by the ACCC is related to “historical” pricing schemes.
“The allegations relate to a period of significant cost inflation when Coles was receiving a large number of cost price increases from our suppliers and, in addition, Coles’ own costs were rising, which led to an increase in the retail price of many products,” Coles said in a statement.
Meanwhile, Woolworths said in a statement that it will “carefully review the claims made by the ACCC and will continue to engage with the ACCC on the matter.”