ACCC Takes Legal Action Against Woolworths and Coles for Misleading Pricing Claims

The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against Woolworths Group Limited and Coles Supermarkets Australia Pty Ltd, alleging breaches of the Australian Consumer Law. The allegations focus on misleading consumers with deceptive discount pricing strategies across a broad range of supermarket products.

According to the ACCC, both Woolworths and Coles marketed certain products at regular prices for extensive periods before abruptly increasing the prices by at least 15% for short durations. These products were then advertised under Woolworths’ ‘Prices Dropped’ and Coles’ ‘Down Down’ promotions at slightly reduced prices, which remained higher than the original pre-spike pricing.

ACCC Chair Gina Cass-Gottlieb stated, “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.”

The watchdog alleges this conduct involved 266 products at Woolworths over 20 months and 245 products at Coles across 15 months, impacting tens of millions of sales, and resulting in significant revenue for both supermarket giants. The ACCC emphasizes the importance of pricing transparency, especially amidst rising cost of living pressures for consumers.

The legal action highlights specific instances where products were subject to pricing manipulation. For example, Woolworths reportedly increased the price of the Oreo Family Pack from $3.50 to $5.00 before marketing it at $4.50 under the ‘Prices Dropped’ promotion, still above the original price.

Coles similarly placed the Strepsils Throat Lozenges from $5.50 to $7.00 before advertising a ‘Down Down’ price of $6.00, exceeding its original pricing. The ACCC garnered evidence through consumer contacts and monitoring online social media engagements before conducting a thorough investigation.

Both Woolworths and Coles have responded to the allegations. Woolworths committed to reviewing the claims, stating that maintaining consumer trust and offering genuine value is vital, while Coles plans to contest the proceedings, citing the period’s significant cost inflation as a factor in pricing adjustments.

In light of the proceedings, CHOICE, an Australian consumer advocacy group, emphasized the need for greater transparency in supermarket pricing. ACCC is pursuing declarations, penalties, and community service orders requiring these supermarkets to fund charities that deliver meals to Australians in need.

This action marks a significant chapter in ACCC’s ongoing campaign against misleading consumer price practices, reminiscent of previous cases involving retailers like Dell and Qantas. The current maximum penalty for each breach occurring after November 10, 2022, is substantial, but penalties will ultimately be determined by the Federal Court based on its findings.