Woolworths and Coles respond to Federal Court proceedings after allegedly misleading customers with marketing campaigns
Woolworths and Coles are being taken to Federal Court by the Australian Competition and Consumer Commission (ACCC).
On Monday, the regulator announced that it has commenced separate proceedings against the major supermarket chains “for allegedly breaching the Australian Consumer Law by misleading consumers through discount pricing claims on hundreds of common supermarket products”.
“The ACCC’s allegations relate to products sold by each of Woolworths and Coles at regular long-term prices which remained the same, excluding short-term specials, for at least six months and in many cases for at least a year,” the ACCC said in a statement.
“The products were then subject to price rises of at least 15 per cent for brief periods, before being placed in Woolworths’ ‘Prices Dropped’ promotion and Coles’ ‘Down Down’ promotion, at prices lower than during the price spike but higher than, or the same as, the regular price that applied before the price spike.”
It’s alleged that the misconduct involved 266 products for Woolworths over 20 months, and 245 products for Coles over 15 months.
ACCC chair, Gina Cass-Gottlieb, said that the regulator alleges that Woolworths and Coles’ marketing campaigns have misled their customers.
“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products. However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price,” she said.
“We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory.”
“We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price.”
The ACCC has alleged that the supermarkets “sold tens of millions of the affected products and derived significant revenue from those sales”.
In a statement given to Mumbrella, Woolworths said it will “carefully review” the allegations made by the ACCC.
“Cost-of-living pressures remain a key issue for millions of Australians who shop with us every week. Our customers are telling us they want us to work even harder to deliver meaningful value to them and it’s important they can trust the value they see when shopping our stores,” Woolworths Group CEO, Amanda Bardwell, said.
“Our Prices Dropped program was introduced to provide our customers with great everyday value on their favourite products.
“We remain committed to offering many ways for customers to save at the checkout, including thousands of weekly specials, everyday low prices on household essentials, a great value own brand range and through our Everyday Rewards program.”
In a separate statement given to Mumbrella, Coles said it intends to defend the proceedings.
“The allegations relate to a period of significant cost inflation when Coles was receiving a large number of cost price increases from our suppliers and, in addition, Coles’ own costs were rising, which led to an increase in the retail price of many products,” the statement reads.
“Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers through the recommencement of promotional activity as soon as possible after the establishment of the new non-promotional price.
“In line with our values, Coles takes compliance with the Australian Consumer Law extremely seriously, and places great emphasis on building trust with all stakeholders, especially our customers.
“Coles is acutely aware of the cost-of-living pressures affecting households and continually seeks to deliver value to our customers. We do this in a variety of ways including promotional campaigns, every day low prices, Coles Own Brand and Flybuys. The Down Down program is one type of promotional campaign involving a longer-term reduction in the retail price of a product, and has been important in delivering lower prices to our customers and driving volume for our suppliers for many years.”
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Neil Griffiths is the Managing Editor of Mumbrella. He joined the company in October 2023.
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If people can make an automatic extension that collates and spits out the next specials, kinda hard for the supermarkets to argue that it’s not built that way by formula.
We all know the suppliers are being held ransom behind the scenes as well, it’s not just the consumers getting straddled in an unfriendly way. Just need more noise around the racket.
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They know exactly what they are doing, to the point consumers can even tell when it will be on the “next promo”. It is clearly being gamed
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