Court rules Coles misled shoppers with its ‘Down Down’ discount campaign | Coles

A federal court has handed down a landmark ruling for the supermarket industry after Coles misled Australian customers by promoting fake “Down Down” discounts on everyday groceries.

Judge Michael O’Bryan handed down his decision on Thursday, dealing a significant blow to Australia’s second-largest supermarket chain, which argued the discounts represented genuine savings during a period of high inflation.

The Australian Competition and Consumer Commission has sued Coles and rival Woolworths, accusing the supermarket giants of duping shoppers between 2021 and 2023 by using promotional schemes to hide price increases on hundreds of products.

O’Bryan’s decision in the Coles case, heard in February, preceded his decision in a similar case against Woolworths heard in Sydney in late April and early May, which the judge is due to decide later this year.

In the Coles case, the supermarket sold 245 items at one price during an average period of the year, then increased its prices for an average of 28 days, and then dropped this to a third price that was more expensive or equal to the first price.

This strategy is known as “was/was” comparative pricing: Coles advertised products with “Down and Down” promotional tickets, where shoppers were shown the higher “was” price alongside the new, supposedly discounted “was” price.

However, the supermarket did not explain that the prices on the tickets were only valid for a short period of time and that the items were sold at a cheaper price before that.

Coles acknowledged during its trial that when it raised the price of a product from its original “before” price, the supermarket had already planned and agreed with the supplier what the new “Down” price would be.

The supermarket’s legal counsel argued that the promotional prices were genuine discounts offered to shoppers following an increase in wholesale costs demanded by suppliers at a time of rising inflation.

The trial examined 12 sample products in detail, including Rexona deodorant, Arnott’s Shapes, 2-litre Coca-Cola and Karicare baby food bottles and 14 price tags.

Reading a summary of his decision in a Melbourne courtroom on Thursday, O’Bryan accepted that the price increases were made in the “ordinary commercial manner” and that Coles had met demands from suppliers.

But the judge upheld the ACCC’s claim that Coles had mistakenly applied “discounts” on 13 of 14 promotional tickets based on increased prices available for a very short period of time.

O’Bryan said if the average customer knew the prices on tickets were valid for such a short period of time, they wouldn’t think the discounts were real.

He said “Up and Down” tickets for sample products would not be misleading if the products were sold at the “was” price for at least 12 weeks.

This aspect of his decision looks set to set a precedent for the supermarket industry; on how long a price increase must be implemented before a reduction can be encouraged without legal consequences.

On the 1.2kg box of Nature’s Gift dog food, one of 12 Coles products examined in court, O’Bryan said one of the promotional tickets did not actually show the “was” price and so could not be considered misleading.

It found the supermarket giant had engaged in misleading conduct contrary to Australian consumer law.

The judge’s decision means Coles is expected to be sentenced, although the size of the sentence will not be determined until further hearings.