How to watch Justice Michael O’Bryan deliver the landmark judgment on “Down Down” pricing
Updated ,first published
Coles has misled millions of Australians for years by advertising fake discounts to customers through its “Down Down” programme, the Federal Court has ruled, in a landmark ruling that exposes the supermarket giant to significant potential fines.
Federal Court Judge Michael O’Bryan upheld claims by the Australian Competition and Consumer Commission (ACCC) that the Coles discounts were merely a rebate from increased prices that were available for such a short period that customers did not believe they were real.
Coles’ share price fell slightly, falling more than 2 per cent in the hour after the decision, as the supermarket considered whether to appeal and the regulator looked at “significant” penalties.
The ACCC alleged Coles artificially increased the prices of hundreds of products for a short period of time so they could say their new price was a discount from the previous price, when in fact the “More Down” price was higher than it had been a few weeks earlier.
Coles defended the claims by arguing that the discounts were genuine specials to help customers and that sales were made after prices had risen due to inflation.
O’Bryan found that Coles was increasing prices because suppliers wanted it. “Coles has commercially justified raising prices,” O’Bryan said in a summary of his decision.
But he said they had to be sold at a higher price for 12 weeks for customers to think the discounts were real. Most of Coles’ products were at higher prices for only four weeks. As a result, it found Coles had misled customers.
“The relevant products were not sold for a reasonable period of time at the price stated on the ticket and as a result the discount shown on the tickets was not genuine,” O’Bryan said.
“In offering sample products on these ‘Down Down’ tickets, Coles engaged in misleading trade or business conduct contrary to the Australian Consumer Law and made a misleading representation as to the price of the sample products.”
O’Bryan’s decision precedes his decision in separate but very similar cases against Woolworths by the ACCC, which he chaired. In that case, the ACCC alleged Woolworths’ “Prices Down” program where discounts examined during Sydney court hearings included items sold at a higher secondary price for less than 12 weeks.
As public anger over inflation peaked in late 2024, the consumer watchdog dropped legal bombshells on Coles and Woolworths, accusing them of offering fake discounts on products priced the same or even higher than before.
Coles said the decision was being reviewed. “The court found that all price increases resulted from increases in supplier cost prices and were therefore commercially justified,” Coles said in a statement to the stock exchange.
ACCC chair Gina Cass-Gottlieb said the regulator would impose a major penalty against Coles, which made $1.1 billion in profits in the last financial year.
“The ACCC will seek a significant penalty, reflecting the importance of accurate pricing for consumers, and also because the penalty cannot be ignored simply as a cost of doing business and it is crucial that it acts as a significant deterrent to this type of behaviour,” Cass-Gottlieb said.
“The ACCC brought this case in the public interest because we felt that the pricing practices in Coles’ ‘Down Down’ scheme made it difficult for customers to determine the true value for money when shopping for household essentials,” he said.
Coles misled shoppers with “More Down” pricing on 245 products, the consumer watchdog has claimed, as it launched the first legal action.
But during the two-week hearing, the parties agreed to focus on a small number of products sold between January 2021 and May 2023, including a 2-litre bottle of Coca-Cola, Colgate toothpaste, a 3-ounce can of Karicare baby food, Rexona deodorant, Lurpak butter and a tin of Arnott’s Shapes.
The court heard the example of Nature’s Gift Wet Dog Food, priced at $4, between April 18, 2022 and February 7, 2023. This price rose to $6 (its second price) for seven days before Coles introduced its third price of $4.50 as a discount from $6.
In another example, tendered in documents and disputed in court, Shapes biscuits sold for $5 per pack in 2021, then rose as high as $6.50 and fell back to $5.50 with a Coles promotion.
O’Bryan found that 13 of 14 sample product labels misled customers. The price of one product, a dog food product, was not thought to mislead customers because the product’s shelf labels did not include the “was” price compared to the temporarily higher price before its specialty product.
The court heard evidence that millions of Australians had seen adverts for the “Down Down” promotion and many had purchased products sold under the promotion.
Coles is also facing a class-action lawsuit over misleading promotions that has yet to be fully heard by the court. While the ACCC’s case laid out the facts about Coles’ discounting practices, this had essentially been halted and will now continue.
Unlike hearings in the case, where a number of current and former Coles senior executives were called as witnesses, no senior representatives from either side were present in federal court on Thursday.
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Elias Visontay is the National Consumer Affairs Reporter for The Sydney Morning Herald and The Age.Connect via email.
