Woolworths and Coles accused of disgraceful act

Australia’s two biggest supermarket chains will face court over allegations they misled customers with fake discounts.

The Australian Competition & Consumer Commission launched legal action in the federal court against Woolworths and Coles on Monday.

The consumer watchdog claims both retailers bumped prices of products by 15 per cent for brief periods before placing them in Woolworths’ Prices Dropped promotion and Coles’ Down Down promotion at prices that were actually the same as, or higher than, their regular price.

They are both accused of doing this with hundreds of different product lines. 

ACCC chair Gina Cass-Gottlieb said the duopoly breached consumer law by making ‘misleading claims about discounts, when the discounts were, in fact, illusory’.

‘It is critical that Australian consumers are able to rely on the accuracy of pricing and discount claims,’ Ms Cass-Gottlieb said.

‘We allege these misleading claims about illusory discounts diminished the ability of consumers to make informed choices about what products to buy and where.’

The allegations relate to 266 products for Woolworths sold at different times across 20 months and 245 products for Coles sold at different times across 15 months.

The representations were made on pricing tickets displayed to consumers in-store as well as online, usually with a ‘was’ price displayed showing what the price was during the short-term price spike.

The watchdog produced examples of the supermarket giants allegedly increasing prices to establish a new ‘was’ price.

They allege Woolworths had the cost of a family pack of Oreo biscuits set at $3.50 for at least 696 days before increasing it to $5 on November 22, 2022.

That increased price was kept for just 22 days before it was put back on the promotion for $4.50 with a ‘was’ price of $5.00′, so effectively Woolworths is accused of raising the price of the biscuits while advertising them as being on discount.   

The ACCC  alleged Coles conducted a similar scheme on Strepsils throat lozenges which cost shoppers $5.50 for at least 649 days.

‘On 12 October 2022, the price was then increased to $7.00 for a period of 28 days,’ the statement reads.

‘The false or misleading representations concerned the price of household staples at a time of increasing cost of living pressures.’

 The consumer watchdog alleged the supermarkets used the briefly increased cost as the new ‘was’ price when placed back on sale

The watchdog is seeking penalties, costs and community service orders for supermarkets to fund registered charities to deliver meals to vulnerable Australians.

Part of the allegations occurred after November 10, 2022, when the maximum penalty for breaching Australian Consumer Law increased.

Any offences after that date could cost the supermarket giants three-times the value of ‘reasonably attributable’ benefit obtained, 30 per cent of turnover during the breach period, or $50,000,000, whichever has the highest value.

Responding to the allegations, Woolworths said it will ‘carefully review the claims made by the ACCC and will continue to engage with the ACCC on the matter’. 

The watchdog is seeking penalties, costs and community service orders for supermarkets to fund registered charities to deliver meals to vulnerable Australians

Coles said it is ‘acutely aware of the cost-of-living pressures’ and intends to defend the allegations in a statement to the stock exchange.

It claims the increase in product prices relates to the supermarket covering it’s own cost increases due to ‘significant’ inflation.  

‘Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers through the recommencement of promotional activity as soon as possible after the establishment of the new non-promotional price,’ it said.