Australia’s two biggest supermarket chains, Coles and Woolworths, have been sued by the country’s competition regulator for allegedly misleading shoppers over discounting claims on hundreds of everyday products.

The Australian Competition & Consumer Commission (ACCC) contends that the supermarkets offered certain products at a regular price for at least 180 days. They then increased the price of the products by at least 15 per cent for a relatively short period of time, and subsequently placed it onto their ‘Prices Dropped’ or ‘Down Down’ programme.

The display of the Prices Dropped and Down Down tickets were misleading, says that ACCC, as the price of the products were in fact higher than or the same as the regular price at which the supermarket had previously offered the products for sale.

“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. 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,” said ACCC Chair Gina Cass-Gottlieb.

“We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory.”

“We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price,” added Cass-Gottlieb.

The ACCC alleges the conduct involved 266 products for Woolworths at different times across 20 months, and 245 products for Coles at different times across 15 months.

The competition regulator said that it identified this conduct through consumer contacts to the ACCC and social media monitoring, which prompted it to then conduct an in-depth investigation using its compulsory powers.

The ACCC estimates that Woolworths and Coles sold tens of millions of the affected products and derived significant revenue from those sales.

Woolworths is alleged to have made false or misleading representations to consumers about the prices of 266 products during the period between September 2021 and May 2023.

Products affected ranged from Arnott’s Tim Tams biscuits and Oreo cookies, to Palmolive dishwashing liquid and Vicks VapoDrops, among several others.

The ACCC cited a specific example of Woolworths misleading price claims. From at least 1 January 2021 until 27 November 2022, Woolworths is alleged to have offered the Oreo Family Pack Original 370g product for sale at a regular price of $3.50 on a pre-existing ‘Prices Dropped’ promotion for at least 696 days.

On 28 November 2022, the price was increased to $5 for a period of 22 days. On 20 December 2022, the product was placed on a ‘Prices Dropped’ promotion with the tickets showing a ‘Prices Dropped’ price of $4.50 and a ‘was’ price of $5.00. The ‘Prices Dropped’ price of $4.50 was in fact 29 per cent higher than the product’s previous regular price of $3.50.

The ACCC alleges that examples such as these suggest that Woolworths had planned the temporary price spike to establish a new higher ‘was’ price for the subsequent ‘promotion’. Woolworths had decided (after a request from the supplier for a price increase) on or around 18 November 2022 to take the product off ‘Prices Dropped’, increase the price, and then put the product back on to ‘Prices Dropped’ three weeks later.

 

It has identified similar dubious practices at Coles. The ACCC contends that Coles made false or misleading representations to consumers about the prices of 245 products during the period between February 2022 and May 2023.

The affected products ranged from Cadbury chocolates and Coca-Cola soft drinks to Sunrice rice, and Whiskas cat food, among several others.

It cited an example of one of the products from Coles catalogue. From at least 1 January 2021 until 11 October 2022, Coles offered the Strepsils Throat Lozenges Honey & Lemon 16 pack product for sale at a regular price of $5.50 (on a pre-existing ‘Down Down’ promotion) for at least 649 days, including one seven-day short-term special.

On 12 October 2022, the price was then increased to $7 for a period of 28 days. On 9 November 2022, the product was placed on a ‘Down Down’ promotion with the tickets showing a ‘Down Down’ price of $6.00 and a ‘was’ price of $7.00. The ‘Down Down’ price of $6.00 was in fact 9 per cent higher than the product’s previous regular price of $5.50.

The ACCC alleges Coles had planned the temporary price spike to establish a new higher ‘was’ price for the subsequent ‘promotion’. Coles had decided (after a request from the supplier for a price increase) on or around 7 October 2022 to take the product off ‘Down Down’, increase the price, and then put the product back on to ‘Down Down’ four weeks later.

The ACCC is seeking declarations, penalties, costs and other orders by way of the proceedings filed in the Federal Court.

It is also seeking community service orders that Woolworths and Coles must each fund a registered charity to deliver meals to Australians in need, in addition to their pre-existing charitable meal delivery programmes.

Separately, the ACCC was directed by the Treasurer in January 2024 to conduct an inquiry into the Australian supermarket sector, its pricing practices and the relationship between wholesale, farmgate and retail prices. That investigation is ongoing and the final report is due by 28 February 2025.

The ACCC said that the investigation into the conduct which is the subject of the latest proceedings filed in the court this week pre-dates this inquiry. The inquiry commissioned by the government will not consider the issues in dispute in these proceedings.

Read: Coles, Woolies Could Be Fined Billions Under New Code Of Conduct