Supermarket giant Coles broke consumer law by misleading shoppers on discount prices, a Federal Court judge has found.
The Australian Competition and Consumer Commission (ACCC) sued Coles alleging it misled shoppers with fake discounts on hundreds of common household items under its prominent “Down Down” promotional campaign.
Federal court judge Michael O’Bryan handed down his judgment in Melbourne this morning, finding that in 13 of the 14 pricing tickets submitted to the court, the discount was not genuine, and would have misled an ordinary customer.
The judge found Coles did not sell products at a higher price for at least 12 weeks before discounting them.
“I have concluded that 13 of the 14 ‘Down Down’ tickets… were misleading because the relevant products were not sold at the ‘was’ price stated on the ticket for a reasonable period and as a consequence the discount represented on the tickets was not genuine,”Justice O’Bryan said.
“Coles engaged in conduct in trade or commerce that was misleading.”
Internal guidelines considered in judgment
The ACCC took the supermarket giant to court over the prices it charged on 245 common household items including paper towels, dog food and yoghurt, under its prominent “Down Down” promotion between February 2022 and May 2023.
The consumer watchdog claimed the supermarket giant misled shoppers, by jacking up the price of an item for a short time, before putting it on a discount.
It alleged shoppers were paying the same or more than the product’s regular price, which made the discount fake or “illusory”.
ACCC’s legal counsel Garry Rich argues that when customers see the ‘Down Down’ promotion, they don’t know the price was “actually lower four weeks ago”. (ABC News: Andrew Ware)
In February, legal counsel for the ACCC, Garry Rich, told the court it was part of a “planned” campaign that “disguised” price rises as discounts.
The court also heard there was a “race to the bottom” between Coles and its rival Woolworths, over what could be the shortest period possible to establish a higher price before a discount could be applied.
Coles shortened its time period to four weeks under internal policies known as “guardrails”, designed to ensure shoppers were not being misled by prices rising and falling too quickly.
The price patterns that landed Coles in court
The supermarket giant defended the case, rejecting the discounts were fake.
It claimed the price rises were caused by a period of high inflation that hammered suppliers and the higher priced items were sold in substantial volumes before they were discounted.
Justice O’Bryan said he had taken into consideration that Coles’ own internal policies in January 2022 were that a product could not be sold on a “Down Down” promotion unless the previous price had been established for 12 weeks.
Any period shorter than that would not be considered reasonable by shoppers, he said.
“If the ordinary consumer were told that the product had been ordinarily sold by Coles at the ‘was’ price for a period that was materially shorter than 12 weeks, the consumer would not believe that the ‘Down Down’ price was a genuine discount to the ‘was’ price.”
However, Justice O’Bryan found that Coles had not misled shoppers on the Nature’s Gift dog food product because it didn’t include a previous ‘was’ price on the ‘Down Down’ ticket.
Justice O’Bryan will also rule on a similar case against Woolworths at a later date.
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