Markets live blog: ACCC alleges Coles discounts ‘utterly misleading’ as court case begins, ASX up

ASX 200: +0.1% to 8,930 points (live values below)Australian dollar: +0.1% to 70.83 US centsAsia: Nikkei -0.2%, Hang Seng -0.3%, Shanghai closedWall Street (Friday): S&P500 +0.05%, Dow +0.1, Nasdaq +0.2%Europe (Friday): Dax +0.3%, FTSE +0.4%, Eurostoxx 600 -0.1%Spot gold: -0.3% to $US5,029/ounceBrent crude: -0.1% to $US 67.70/barrelIron ore (Friday): -2.7% to $US96.80/tonneBitcoin: -0.4% at $US68,574

Prices current at around 1pm AEDT

Live updates on the major ASX indices:

Internal emails being read out by the ACCC show staff at Coles fretting over being competitive with Woolworths on a price level.

The emails show that Coles managers described Woolworths’ approach to discounting as “shocking”, suggesting the prices had been dropped without any price establishment period.

They even raised potentially going to the ACCC with their concerns about Woolworths not having a sufficient price establishment period.

The ACCC is arguing that this pressure of being competitive with Woolworths was the reason Coles took a more aggressive approach to the ‘Down, Down’ promotion, which allegedly misled customers.

Well observed Anne — it’s a pain I’m sure most of us have felt when going for our late night chocolate fix … right?

The presumably unwelcome phenomenon of a product size shrinking but the price staying the same (or potentially increasing!) is known as shrinkflation.

The ACCC has had it in its sights, pushing for the supermarkets to have to publicise when there are size changes.

The federal government is consulting on new requirements for supermarkets, including pricing transparency measures.

Thanks for joining us Lawson — the Coles hearings are listed for a fortnight in the Federal Court.

And it’s worth noting that the ACCC is pursuing both Coles and Woolworths, with Woolies defending its case separately in April.

The ASX 200 has made a modest 0.2% gain heading into the after session (2:00pm AEDT), despite falling commodity prices hitting the big miners.

Most sectors have made gains led by technology and retail stocks.

ASX 200 by sector (LSEG, ASX)

After a strong performance last week, there’s been a bit of profit taking among the banks although CBA (+0.5%) is still in demand.

ANZ (-2.5%) is the weakest performer among its peers, while Bendigo Bank is down 1.4% after posting its half year results.

ASX banks (LSEG, ASX)

The bigger, diversified miners are generally lower after key commodity prices fell on Friday. Rio Tinto is down 4.6%.

Copper play Capstone is an exception, gaining 1%.

ASX major miners (LSEG, ASX)

Among the rock kickers, gold miners are the standout, with most benefiting from the spot price jumping back above $US5,000/ounce.

ASX major gold miners (LSEG, ASX)

Retailers are in demand.

Coles (+0.8%) and Woolworths (+0.4%) haven’t been set back by the start of the Federal Court case launched by the ACCC this morning.

JB Hi-Fi is up almost 7% on well-received interim results this morning.

ASX retailers (LSEG, ASX)

Having been battered in recent times, tech stocks have returned to favour this morning, with logistics software provider Wisetech up 8%.

ASX technolgy stocks (LESG, ASX)

Healthcare stocks are doing well with CSL (+1.2%) clawing back some recent heavy losses.

Clarity Pharmaceuticals is up almost 18% on releasing promising results with its prostate cancer therapy.

The top mover on the ASX 200 is shipbuilder Austral (+15%) recouping a part of last Friday’s savage sell off.

ASX 200 top movers (LSEG, ASX)

The bottom movers include Treasury Wine Estate (-5%) after its half year results included a decision to suspend dividends to help improve the company’s debt position.

ASX 200 bottom movers (LSEG, ASX)

A quick recap if you’re just joining us.

Coles is in the Federal Court in Melbourne after the ACCC accused the supermarket of ripping off customers with fake discounts on hundreds of products.

Consumer watchdog boss Allan Fels told the ABC it’s “the case of the century”.

In opening arguments this morning, lawyer for the ACCC Garry Rich SC didn’t mince words, accusing the supermarket giant’s discounts of being “utterly misleading”.

The ACCC’s core argument focused around whether Coles disguised price increases as discounts, and if they could be considered a “fair dinkum statement”.

Nature’s Gift wet dog food was used as an example. The ACCC pointed out that the product previously cost $4, before the price rose to $6, for a week, and then fell to $4.50, with Coles claiming a discount from the higher price.

The iconic ‘Down, Down’ campaign was also in focus, which the ACCC claimed used “illusory” discounts.

The case will set an important precedent for a similar case faced by Woolworths, which will likely be kicking off in April,

We’ll have all the big updates for you right here on the live blog, so stay with us.

And you can watch the hearing here,

Court is back in session at the Federal Court in Melbourne after breaking for lunch.

The ACCC kicked off the trial this morning with opening arguments and is expected to finish with remarks before the end of the first day.

It has accused Coles of being deceptive in its “Down Down” promotions across their supermarkets Australia-wide.

Bendigo Bank released its first half results with its net and pre-provisioning profits marginally ahead of analysts’ expectations, but clearly below those of investors.

At 1:30pm AEDT, Bendigo Bank was down 1.7% to $11.26 per share.

While the bank’s cash net profit, the industry’s preferred measure that excludes on-off impacts, was 3.6% higher than the consensus forecasts, worries emerged about narrowing margins and growing costs.

J.P Morgan’s Andrew Triggs said the “NIM (net interest margin) was slightly better than expected, but this was offset by lower average interest earning assets, and margin pressure (that) is expected to return in H2.”

“Operating expenses were flattered by significant investment spend taken below the line again.

“Bendigo Bank has guided to $70m-$90m of AML (anti-money laundering) investment expenses taken over 3 years, with a $15m headwind flagged for 2H26.”

Mr Triggs said the main positive in result were strong credit trends in its loan book.

UBS analyst John Storey was concerned that the bank’s underlying costs rose around 4% over the half, while investment spending fell around 25%.

He said the AML costs had not yet been factored into forward consensus estimates and the regulator AUSTRAC has not issued a decision on whether the planned action will be sufficient.

The ABC’s national consumer affairs reporter Michael Atkin has also been listening in to today’s proceedings and has filed his take on the case so far.

There has been intense debate about the pricing of more than 200 products at the opening of the landmark ACCC vs Coles court case.

Lawyers representing the consumer watchdog have labelled Coles’s price discounts “utterly misleading” and accused the supermarket retailer of a “planned campaign”.

The hearing is currently on a lunch break — catch up on what happened this morning:

China’s car makers have become the global force in motoring in a blink of an eye, leaving everyone else in the dust, or in the case of Australia’s auto industry, the wrecker’s yard.

How did they do it? Our resident finance guru Alan Kohler has assembled the story on 1 min 53 for you – or in about the time it takes BYD to make two cars.

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Well, that was quite an interesting morning at the Federal Court of Australia in Melbourne.

ACCC’s head counsel Garry Rich SC didn’t hold back in blasting the allegedly deceptive nature of Coles’s “Down Down” promotions.

He did get some pushback from Justice Michael O’Bryan, who said customers weren’t “naive” about price fluctuations in the commercial world during a cost-of-living crisis.

They’ve broken for lunch now on day one of the hearing and it will resume at 2:15pm ADST.

There are bound to be more fireworks this afternoon.

ACCC’s head counsel Garry Rich SC has stepped up his attacks on Coles on the first day of proceedings at the Federal Court of Australia in Melbourne.

He has told Justice Michael O’Bryan that the supermarket giant’s “Down Down” promotions have significantly added to its sales volumes, without providing genuine cost reductions for consumers.

“It’s a very appealing offer, prices are rising everywhere but Coles is telling customers that prices are down,” Mr Rich said.

The head counsel said that between September 2019 and January 2022 observed more “guardrails” in the Down Down promotions.

During that period, products had to be at their new price for longer — a minimum of 12 weeks and a maximum of 18 months —  before being cut and described as a “discount”.

Earlier in the proceedings, Mr Rich gave the example of dog food that had been at a higher price for just a few days before being reduced and acclaimed as a “Down Down” discount.

While ASX 200 is just treading water at the moment (+0.05%), the ASX top 20 is back out of favour with the two heaviest weights on the investing barbell, the miners and the banks, dragging things down.

At 12:20pm AEDT, the ASX 20 was down 0.5%.

Rio Tinto (-4.8%), Fortescue (4.4%) and BHP (-2.2%) are all down after iron prices fell almost 3% on Friday.

The Melbourne-based banks ANZ (-2%) and NAB (1.2%) are also a drag, while the CBA is up.

Coles (+0.6%) is outperforming its blue-chip peers despite enduring an uncomfortable session in the Federal Court at the hands of the ACCC’s lawyers today.

ASX top 20 (LSEG, ASX)

For those just joining us, supermarket giant Coles is in court today, facing allegations by the ACCC of ripping off customers with fake discounts in its trademark Down Down promotions.

The company faces up to $50 million in fines for each potential breach.

In the Federal Court in Melbourne, the ACCC is giving its opening arguments, saying the supermarket allegedly increased its prices artificially for a short period of time, then claimed a discount on the lower regular price.

Wet dog food, deodorant and yoghurt have all been used as examples of the alleged fake discounts.

At the centre of the ACCC’s argument is whether the discounts are “a fair dinkum statement”, and if a reasonable customer, with all the information, would consider those prices a genuine discount.

The case affects millions of Australians who are feeling the pinch of inflation, and the case could set a precedent for a near-identical case that will be heard against Woolworths from April.

Stay with us right here in the blog for all the important updates.

Emilia Terzon here from the Federal Court of Australia in Melbourne, where we’ve just heard a little chuckle in the viewing gallery after watching a few Coles ads.

The ACCC is alleging that the supermarket giant had “illusory” discounts on its famed “Down Down” products during 2022 and 2023, with 245 items being investigated.

The ACCC has argued that shoppers don’t just get exposed to this promise of prices being “down” instore but also on TV, in pamphlets and social media. We have just been played several of the TV ads that Coles has played over the years.

“(A) jingle that sticks in one’s ear than is longer than is healthy,” the ACCC’s head counsel Garry Rich SC quipped.

Hi Colin, we are having a few technical difficulties with our market snapshot, so have unpinned it for now — the ASX 200 is up 0.1% as we speak!

Consumer watchdog CHOICE says it “welcomes” the ACCC legal proceedings against Coles which is on its first day at the Federal Court in Melbourne.

CHOICE says the supermarket giant has been “allegedly misleading consumers” with its signature “Down Down” promotions.

The ACCC says these are fake discounts created by Coles briefly raising prices before offering consumers a ticket item at a value which is often more than the original cost of a few weeks earlier.

“CHOICE welcomes the ACCC’s legal proceedings against Coles for allegedly misleading consumers through ‘illusory’ discounts on hundreds of grocery items,” said Andy Kelly, Director of Campaigns and Communications at CHOICE.

“We know from our extensive work in this area that supermarket promotions can be highly confusing for customers, and have a significant influence on how people make purchasing decisions while grocery shopping.

“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.”

CHOICE says it’s calling for “clearer, transparent price displays at supermarkets”, adding that Coles faced “significant financial penalties” if found guilty.

“This court case is not only a wake up call for Coles, but for other retailers who may be engaging in similar practices,” Mr Kelly said.

“If the ACCC is successful, not only would Coles potentially face significant financial penalties, but other retailers would be put on notice that engaging in similar confusing pricing tactics could be illegal.”

Some 86% of Australians are concerned about the cost of food and groceries, CHOICE added.

While much of the Treasury Wine Estates first half results horror story was pre-released last week, it hasn’t stopped another batch of investors decamping (or is that decanting?).

The stock is down another 4.6% in the morning session.

J.P. Morgan’s veteran retail analyst Bryan Raymond noted that with the company’s net debt continuing to increase, it was at least taking the first steps towards balance sheet repair.

Mr Raymond said a key positive in the results was momentum across the brands, despite challenging shipment trends.

Penfold depletions grew 17% in China, while depletions grew by almost 2% the troubled Americas division.

“This suggests the underlying brand value remains solid despite distributor inventory levels being too high,” Mr Raymond said in a note to clients.

However, debt remains a problem, forcing the cancellation of the 2026 interim dividend.

“The dividend suspension is an important component for a return to the target leverage range, alongside cost-out and a recovery in category trends,” Mr Raymond said.

Japan’s published its economic growth figures for the fourth quarter.

Business investment added most to growth, while exports detracted from growth.

Growth from the consumer sector was unchanged.

There’s been very little change in Japan’s bond market as a result of the release.

The yen too is steady.

“Why on earth are you telling your customers your prices are going down?” ACCC lawyer Garry Rich SC has asked.

The lines of argument are starting to become clear for the ACCC, which has been empathetic to the harsh business environment Coles faces with increasing wholesale costs.

It says there is nothing wrong with the supermarket giant increasing its prices to reflect inflation.

But it also argues that “Coles disguises these price increases as discounts”, which could mislead customers.

The supermarket’s iconic “Down Down” marketing tagline, which has been in use since 2010,is currently in focus.

The ACCC argued that Coles made changes to internal documents that acted as “guardrails” for the discounts in the period immediately before the allegedly misleading conduct that is the focus of the case.

The ACCC said Coles had gone outside the guardrails that it set itself regarding an established period for a set price.