Bargain bust-up: court rules on Coles’ ‘fake’ discounts
A judge will decide whether supermarket giant Coles deliberately misled customers with its “Down Down” price campaign in a landmark ruling that ends a high-stakes legal battle.
The ruling by Judge Michael O’Bryan on Thursday morning could change the way supermarkets operate and could see the $28 billion company face nine-figure fines.
The Australian Competition and Consumer Commission has brought separate but similar cases against the country’s two dominant supermarket chains; The Woolworths case was pending decision at a later date.
Both cases allege that supermarkets misled consumers by briefly increasing prices, then dropping them above the original price and marketing them as discounts.
Once, a can of Nature’s Gift dog food was selling for $4 for almost a year, then the price was briefly raised to $6.
It was later sold for $4.50 under the “Down Down” ticket.
The watchdog spotted hundreds of products in Coles’ campaign, and a similar “Prices Down” edition from Woolworths, which followed a similar formula.
In separate hearings, lawyers for the supermarkets argued that prices had risen due to inflationary pressures and that the discounts were real.
University of Melbourne consumer law expert Jeannie Paterson said the outcome of the case against Coles was too close to call.
“People feel victimized by this short-term price increase before the price drops, but the marketing was absolutely correct,” he told AAP.
Professor Paterson said if Coles was found to have misled its customers it could mean “enormous” fines for the retailer and change the way all supermarkets do business.
“Even if Coles wins, we will see a great deal of skepticism around promotional offers and pricing,” he said.
ACCC barrister Garry Rich SC argued during the hearings that Coles was trying to avoid losing customers by disguising price increases as discounts.
“Why are you telling your customers your prices will drop? They don’t,” he told the court.
But Coles’ lawyer, John Sheahan, argued that “ordinary, reasonable consumers” knew that prices generally tended to rise due to inflation.
Prof Patterson said introducing too little evidence about shoppers’ habits and understanding of discount offers could damage the consumer watchdog’s case.
He added that a decision against Coles would be instructive in predicting the court’s decision in the Woolworths case, but would not be definitive.
“There are some differences between the evidence presented in the two cases,” Prof Patterson said.
“Woolworths will be looking very closely.”
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