ACCC questioned over Down Down prices case
Updated ,first published
The Australian Competition and Consumer Commission’s case that Coles misled customers with its “Down Down” promotions has faced a wall of critical questioning; The judge hearing the case was questioned about whether he had proven the main claim.
On Wednesday, Judge Michael O’Bryan investigated the commission’s claims that customers were deceived into thinking that prices marked “More Down” represented a good deal and were offered for less than the price at which the relevant products had sold weeks earlier.
The judge said the commission had not formally argued as part of the case that the tickets carried those meanings or that they were misleading. “If these are the two basic representations conveyed by the medium of communication, [pricing] ticket… shouldn’t the commission’s case fail?” O’Bryan asked.
The ACCC is seeking to prove Coles’ discounts were misleading, arguing that the supermarket giant increased the prices of a sample of everyday products ahead of its promotions, so it could mark them up higher than the original prices, and falsely claim it had put the products on special.
Coles disputes this claim, arguing that price increases are due to supplier pressure, inflation and market forces, and that subsequent discounts provide real savings. But the company’s defense and witness testimony from former and current staff last week have sparked intense scrutiny of the company’s legal situation, with its admission of errors and concessions that the reductions were pre-planned.
This week’s hearing revealed potential holes in the consumer watchdog’s case.
Summing up the ACCC’s closing submissions, lead counsel Garry Rich SC called on O’Bryan to find that Coles had misled consumers on numerous occasions by advertising its products as “More Down” than their previous price, but suggested they had actually become more expensive.
“This representation was misleading because the ‘before’ price was not the regular price of the product,” Rich said. “Instead, it was a price that was valid only for a short period of time, too short to be the regular price of the product in our representation.”
‘Shouldn’t the Commission’s case fail?’
Federal Court Judge Michael O’Bryan
Rich cited the ACCC’s argument throughout the case, pointing to three price levels for products: the initial or normal price; the second or “establishment” price is at a new and higher amount; and then the third “More Down” price.
Rich said the case boils down to two fundamental questions: “What representation did Down Down tickets convey to their target audience?” and “Was this representation misleading or deceptive?”
He said that although many of Coles’ customers were “well-educated and commercially astute… most of them were not”. Most of them want to “spend as little time as possible grocery shopping,” he said. “It’s a chore.”
Shoppers “see a big red-and-white ticket. They read the price is ‘Down Down.’ They read the price is much higher. They think they’re being offered a good deal. They’re told the price has dropped. They think it’s a real discount. Many of them will have no idea the price was lower four weeks ago,” he said.
At this point O’Bryan interrupted Rich and warned that the commission’s arguments regarding consumer considerations of getting a good deal and comments about “The Bottom Down” had not been formally presented by the ACCC as part of its case.
While Rich appeared confident in these arguments, O’Bryan interjected with his critical intervention: “Shouldn’t the Commission’s case fail?” the judge asked.
“Just warming up,” Rich replied.
O’Bryan also examined the ACCC’s emphasis that the first price was the normal price and that the second price was not genuine but only to allow for the Lower Down discount; The supermarket’s witnesses conceded last week that Coles was more attractive to shoppers by comparing its “before” and “now” prices to show the size of the discount.
Rich highlighted the lack of transparency regarding the “was” price on the Down Down ticket.
“The words Down themselves imply a discount from the previous price. In other words, it is a past price,” Rich said. “If these were forward-looking statements in the sense of ‘this is the price you will pay’, they would be incorrect because all the evidence shows that Coles had previously agreed with its suppliers that the two ‘previous’ prices would only be valid for a limited period of time and would not apply going forward.”
The trial continues.
The Business Briefing newsletter delivers big stories, exclusive news and expert insights. Sign up to receive it every weekday morning.
Elias Visontay is the National Consumer Affairs Reporter for The Sydney Morning Herald and The Age.Connect via email.
