Supermarket giant Coles has been accused of orchestrating a “planned” campaign to mislead customers over price discounts, as the Australian Competition and Consumer Commission (ACCC) launched a high-profile lawsuit against the retailer. The case, which began in Federal Court today, has been described by a former ACCC boss as “the case of the century.”
The ACCC’s legal counsel, Garry Rich, presented opening arguments focusing on the pricing of 245 common household products under Coles’ “Down Down” promotions, a campaign that has been running since 2010. According to Rich, Coles allegedly inflated prices for a brief period before discounting them to levels that were either the same as, or higher than, the regular prices.
Allegations of Planned Misleading Conduct
Rich argued that Coles customers were repeatedly deceived and that the pricing strategy was not “fair dinkum.” He claimed that evidence would demonstrate the conduct was “planned,” with Coles “disguising” price increases as discounts. Internal compliance documents from Coles regarding the “Down Down” program reportedly revealed key policy changes before the alleged misconduct.
Rich further alleged that nearly all the promotions would have been prohibited under the earlier policy, suggesting that the price changes were driven by a commercial strategy to match Woolworths’ pricing.
Controversy Over Dog Food Pricing
One focal point of the case involved the pricing of dog food, with Justice Michael O’Bryan questioning the ACCC’s assertions. Rich detailed how Coles sold a 1.2-kilogram loaf of Nature’s Gift Wet Dog Food for $4 over nearly 300 days between April 2022 and February 2023. The price then spiked to $6 for seven days before being reduced to $4.50, which was marketed as a “Down, Down” discount.
“By making the statement it did, without disclosing those crucial qualifying facts, Coles led reasonable consumers into error.” – Garry Rich, ACCC’s legal counsel
Rich argued that while the “Down, Down” price was “literally true,” it was “utterly misleading.” He claimed that a reasonable consumer would not perceive the $4.50 price as a genuine discount.
Justice O’Bryan, however, contended that the initial $4 price was “irrelevant” due to changing cost circumstances, challenging the ACCC’s perspective on the matter.
Coles’ Defense and Industry Context
In response, Coles’ representative John Sheahan KC rejected the ACCC’s allegations, asserting that customers were aware of the “sudden materially increasing prices” in the current economic climate.
“Grocery shoppers at Coles are much more attuned to these things than anyone around these tables are likely to be.” – John Sheahan KC, Coles’ representative
Sheahan emphasized that consumers understood they were shopping in an inflationary environment, implying that the ACCC’s claims distorted the perspective of an “ordinary, reasonable consumer.”
Coles, which has reported record profits and faced accusations of price gouging in recent years, will continue its opening remarks tomorrow. The outcome of this case will not directly address these broader allegations, but it could set a precedent for retail pricing practices.
Implications for the Retail Sector
The case has drawn significant attention, with consumer advocacy group CHOICE welcoming the Federal Court action. The group highlighted the substantial influence of supermarket promotions on consumer purchasing decisions.
“During a cost-of-living crisis, retailers should be doing all they can to ensure clear, transparent pricing — not obscuring rising prices with confusing promotions.” – Andy Kelly, Director of Campaigns and Communications, CHOICE
This legal battle serves as a potential wake-up call for other retailers who may engage in similar practices. As the case unfolds, it could lead to increased scrutiny and regulatory action aimed at ensuring pricing transparency in the retail sector.
The outcome of this lawsuit could have far-reaching consequences for Coles and the broader supermarket industry, potentially prompting changes in promotional strategies and pricing transparency to better protect consumers.
