All eyes on Coles as it fights claims it misled customers on hundreds of products
Allegations that Coles misled consumers with “misleading” discounts on a range of household items will be tested in the Federal Court this week as the competition watchdog and the supermarket giant face off in a blockbuster case over pricing promotions.
The high-profile case, which will act as a major test of industry practices, will put a microscope on whether promotions on hundreds of products are genuine or misleading and could see the supermarket face hefty fines.
The Australian Competition and Consumer Commission (ACCC) laid out bombshell allegations against Coles and rival Woolworths in late 2024, claiming the two retailers had misled consumers through price promotions that were in fact higher than or the same as the previous regular price.
Coles is defending the case and said many of its suppliers, facing cost pressures, had asked it to raise prices during the period in question. Woolworths, which is facing similar allegations from the ACCC, is expected to appear in court in the coming months.
Coles will argue the ACCC’s case relates to a period when the supermarket and its suppliers experienced “significant cost increases, including but not limited to increases in global commodity prices and costs for packaging, shipping, utilities and international shipping”.
Coles and its suppliers therefore reassessed the prices of the products, with some products being removed from the “Down Down” scheme and sold in “significant quantities” at non-promotional prices and then for up to six weeks before returning to the discounted programme, according to the firm’s short answer statement.
“The unpromotional price was the actual, undiscounted shelf price,” Coles told the court. “The subsequent ‘discounted’ program price was therefore a genuine discount from that shelf price. The discount was not misleading.”
The hearing, which will last 10 days, will be published on the Federal Court’s website YouTube channel It will be run from Monday morning by Judge Michael O’Bryan, who helped review Australia’s competition laws a decade ago.
Coles’ “Down, Down” program was marketed as a campaign designed to reduce the normal shelf price of commonly purchased products, “thereby offering predictable and reliable value to customers” and reduce the cost of shopping baskets, the ACCC said in its brief statement.
The ACCC alleges Coles increased the price of hundreds of products “for a relatively short period of time” for up to 45 days, then placed them in a “Down Down” promotion, in many cases advertising this higher price as the relevant comparison price.
“The false or misleading statements concerned the prices of household essentials at a time when living costs were rising and were made in the context of a program Coles was specifically promoting to help consumers make long-term savings on food costs,” the watchdog said. “By its conduct, Coles has diminished consumers’ ability to make informed choices about their essential purchases.”
Fines for each violation can reach $50 million, and food items can be donated to various charities. The ACCC will allege Coles committed 255 breaches during the period in question, including some products being placed in the “Down Down” promotion more than once.
For efficiency, the court hearings are expected to focus on 12 items in particular, including the Karicare formula, packs of Arnott’s Shapes and a tin of Danone yoghurt.
Coles’ lead lawyer in the case is John Sheahan KC, who represented a number of major firms including ANZ when the Australian Securities and Investments Commission alleged the bank breached continuous disclosure obligations during its $2.4bn capital raise, as well as Nine, which owns this imprint, and journalists Nick McKenzie, Chris Masters and David Wroe are involved in ex-soldier Ben Roberts-Smith’s defense against defamation claims.
The ACCC’s lawyers will be led by Garry Rich SC, who is representing the ACCC in cases against Meta, where the competition watchdog alleges the tech giant has breached the Australian Consumer Law, and in cases related to ANZ’s 2023 acquisition of bank Suncorp.
The case comes as the government faces renewed pressure on the cost of living after inflation rose 3.8 per cent in the 12 months to December and the Central Bank increased interest rates this month.
When the ACCC’s trial is launched in September 2024, Prime Minister Anthony Albanese Accused Coles and Woolworths of fueling inflation ACCC chair Gina Cass-Gottlieb claimed the discounts were “misleading”, saying companies were using long-term promotions to convince customers that prices were being held steady, when in fact they were raising prices.
Coles CEO Leah Weckert announced in October that year that the supermarket chain took the matter very seriously. “All our specials, discounts and programs like ‘Down Down’ we really aim to deliver real savings to our customers and this goes to the heart of customer trust,” he said.
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Millie Muroi is the economics writer for The Sydney Morning Herald and The Age. He was previously an economic correspondent for the Canberra Press Gallery and a banking writer in Sydney.Connect with: X or email.
