Woolies accused of ‘fanciful’ price drops by watchdog
Woolworths used short-term price increases followed by discounts to disguise high prices and mislead Australian consumers, the Federal Court was told.
The Australian Competition and Consumer Commission’s joint case against Woolworths and Coles discount policies is nearing its conclusion after 17 hearings.
The watchdog alleged that the two supermarket giants increased the prices of hundreds of products by at least 15 percent, then dropped them to their starting price or above but below the rising price, under “Prices Down” and “Down Down” promotions.
ACCC barrister Michael Hodge KC told the court in his closing submissions that short-term increases made price declines “fanciful”.
“Whether or not the representation that the price has fallen is true… it is fanciful, because looking at what actually happened at the particular price of this product, it has not fallen, it has gone up,” Mr Hodge told the hearing in Sydney.
Woolworths argued that the prolonged period of inflation following the COVID-19 pandemic had led to a series of price increase demands and negotiations with suppliers.
But the ACCC said the supermarket giant’s pricing plan and temporary price increases told suppliers and consumers two incompatible things.
“The Commission says just because you tell your customers they will now pay less for the product, agreeing to pay your supplier more does not make it right,” Mr Hodge said.
Matters relating to Woolworths’ margins were confidential and could not be considered by the court.
But Judge Michael O’Bryan questioned whether starting prices, which are sometimes valid for more than 12 months and then temporarily increased for as little as a week, were relevant.
“Because the commission’s case properly begins and ends with the two prices being reasonable,” Judge O’Bryan said.
“The question is: Were all these adjectives that describe what might otherwise happen real, not artificial, artificially temporary, misleading?”
Judge O’Bryan said he did not find the promotional strategy to be inherently misleading or malicious.
Woolworths’ barrister, Robert Yezerski SC, said in his closing argument that the watchdog had attempted to argue two separate cases, one of which had been left out of its original brief.
The Commission had modified its argument to include issues of profit maximization and price competitiveness.
“Mr Hodge this morning… correctly estimated our concerns to the extent that I think even the ACCC recognized as a departure from its brief statement,” he said.
Mr. Yezerski said the case failed for two reasons.
He told the court: “First, the alleged misleading or deceptive representation was not conveyed to ordinary and reasonable consumers through ‘Prices Down’ tickets.”
“Secondly, even if this was the period during which the ‘previous’ price was charged… it was long enough to constitute the previous normal price of the products and we say that in any case this period was reasonable.”
The trial continues.
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