‘Absolute tsunami’ of price rise requests led Woolworths to change internal rules
Woolworths changed its internal guidelines designed to stop suppliers “gaming” with promotions in response to an “absolute tsunami” of suppliers pushing to raise shelf prices amid rising inflation, a former senior manager told the Federal Court.
Woolworths’ former chief commercial officer Paul Harker was questioned on Wednesday in the Australian Competition and Consumer Commission’s (ACCC) landmark case against the supermarket giant, which accused Woolworths of offering “misleading discounts”.
Harker said Woolworths’ “Prices Down” program was designed to give shoppers greater long-term price certainty and deter suppliers from arbitrarily raising prices while discounts were ongoing.
Harker told the court: “The rules prevent people from moving in and out of the program without a legitimate business reason. You couldn’t game the system if that were the case.”
“You have to have a really good reason for wanting to buy [a product] closed because there is a huge downside to removing it [the Prices Dropped program]. It’s very difficult to get it back to normal.”
Harker was the first witness called to the stand in the two-week trial in Sydney Federal Court examining the price movements of a basket of 12 staples including Tim Tams, Oreos, Kleenex tissues and homemade penne pasta.
The ACCC accused the supermarket of making “false or misleading representations” by promoting discounts to help shoppers make long-term savings on food at a time when cost of living pressures are soaring.
When questioned by ACCC lead lawyer Michael Hodge about what specific rules had been designed by the KC to prevent “gaming the system”, Harker also pointed to the price-setting window before the discounted price, which was initially set at 8 to 12 weeks but was later reduced.
“You understand that the primary reason for setting a price is that the induced decline is a legitimate decline,” Hodge, KC, told Harker.
Harker responded: “The law requires us not to mislead consumers. We have very non-specific guidance other than saying you must hold a price for a reasonable period of time and sell in reasonable quantities.”
But as inflation continues to march through the Australian economy, Woolworths’ internal “price confidence policy” has been tightened from 8 weeks to 12 weeks, about half that period. The court heard this was not set out in a document but was agreed through active discussions with the business leadership team.
“We moved from a set of policies around team management and supply dynamics to ‘what it actually means to be on shelf for a customer’ and that’s how we arrived at our final price confidence policy of three to six weeks,” Harker said.
Harker spent more than three decades at Woolworths, most recently as chief commercial officer responsible for the buying and sales teams for five years before leaving the role last year.
In his opening statement on Tuesday, Hodge told the court there was a “subtle magic” in the red-and-white tickets for the Prices Are Down programme.
After the consumer watchdog launched proceedings against Coles and Woolworths in September 2024, Woolworths quietly discontinued its “Prices Down” program in December 2024, focusing instead on its “Low Shelf Price” promise, which promised lower prices for at least 12 weeks. Coles’ “Down Down” program is still available.
Judge Michael O’Bryan is presiding over both cases against Woolworths and Coles, whose decision has been reserved.
Internal emails read to the court during Coles’ trial in February revealed how Coles shortened its own 12-week price-setting window to match Woolworths’.
Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect with: X or email.
