Supermarket defends discount claims in ACCC case
Coles says its years-long “Down Down” campaign is a broader indication that it is trying to keep prices low by defending claims that promotions mislead customers rather than advertising specific discounts.
On Tuesday, the second day of a landmark case brought against the supermarket by the Australian Competition and Consumer Commission over “misleading” discount claims, Coles’ legal team continued to lay out its arguments, claiming the watchdog’s mention of the “Down Down” jingle was “a bit of an exaggeration”.
Coles’ lead lawyer, John Sheahan, KC, noted how ACCC lawyers played two TV adverts promoting the “Down Down” campaign for the court to draw attention to the context in which consumers saw ticket labels containing the sales slogan on shelves.
Sheahan argued that because the ACCC’s complaint focused on movements in prices of a range of supermarket products, evidence about the wider advertising context was irrelevant.
“With all due respect, it’s a little frustrating,” Sheahan told Judge Michael O’Bryan.
The watchdog’s complaint alleges that Coles deliberately doubled a product from its regular price, known as the first price, at an artificially higher price for a short period of time, then dropped it to a third “Down” price. “Down Down” promotions included a “was/is” price that showed the difference between the third and second price.
Much of Coles’ arguments, published on Tuesday, focused on consumers’ perception of time and attention spans, highlighting that commercial forces such as suppliers’ costs have a significant impact on pricing decisions.
Coles’ lawyers also attempted to paint a picture of the “Turn Down” price not as a temporary discount, but as a long-term lower price that consumers could rely on; so that if they do not buy the “Down Down” item in one store, they can be sure that it will be available at that price in the next store.
Sheahan made this point when admitting that the “Down and Down” shelf labels advertising the “was/was” price difference at the heart of the ACCC’s claim that it misled consumers did not specify an end date.
He said the ad campaign and the big red hand did not advertise a specific discount, but were a broader indication that the supermarket was “trying to keep prices low”.
Sheahan also accepted the ACCC’s argument on Monday that Coles set a second, higher “establishment” price for a product before the “Down Down” discount, while planning and agreeing a third “Down Down” price once the second price came into force.
But while this may be true, he suggested that commercial considerations are more relevant in how the supermarket, together with suppliers, decides on price increases and decreases due to market forces and inflationary pressures. “After all, all prices are temporary, nothing lasts forever.”
Sheehan also said the ACCC’s argument assumed an unrealistically complex thought process on the part of shoppers.
He said that in an environment of high inflation, people understand that prices will change, and that “Down and Down” ticket stickers that include the price this/that are “a legitimate sign, a real sign, of good value today.”
“The idea of a relatively short-lived previous regular price is too complex to be credibly attributed to the ordinary, reasonable consumer walking down the aisle at Coles,” Sheahan said.
He said the ACCC needed to prove its claim that the second “provisional price” was not real in order to prove that the subsequent “Drop” prices were not real.
On Monday, the first day of two weeks of hearings, the Federal Court in Melbourne heard evidence put forward by the ACCC outlining internal Coles staff emails in which a senior Coles executive warned colleagues that it was wrong to advertise the price of a product as “More Down” when it was cheaper just four weeks earlier. It wasn’t in the spirit of the supermarket giant’s previous marketing campaign to continue doing so.
The case focuses on a sample of products sold between January 2021 and May 2023, including dog food, Shapes biscuits and Coca-Cola; ACCC lawyers said they were sold under a strategy offering “completely misleading” or “half-true” discounts.
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Elias Visontay is the National Consumer Affairs Reporter for The Sydney Morning Herald and The Age.Connect via email.
