Updated May 14, 2026 — 6:04pm,first published May 14, 2026 — 9:17am
Save
You have reached your maximum number of saved items.
Remove items from your saved list to add more.
AAA
Coles will face fines and demands for compensation that could reach hundreds of millions of dollars for spruiking fake discounts to more than 10 million shoppers, after the Federal Court ruled the supermarket giant misled Australians for years through its “Down Down” program.
Justice Michael O’Bryan upheld allegations from the Australian Competition and Consumer Commission (ACCC) that Coles’ so-called discounts were based on increased prices that were available for less than a month, rendering them a sham.
Commission chair Gina Cass-Gottlieb declared the regulator would be pursuing a penalty against Coles, which made $1.1 billion in profit last financial year, large enough that the chain would not just see it as a “cost of doing business” while a class action firm flagged it had 10 million victims to compensate.
The decision, which shocked many in the sector, could have major implications for Woolworths, too, because that chain is also facing allegations it misled customers using similar tactics to Coles in a case that was heard by the same judge.
But O’Bryan delivered a major silver lining for Coles, setting out clear rules for discounting in the supermarket sector and questioning whether customers were even harmed by the chain’s practices.
“If Coles had offered the products for sale at the ‘Was’ price for twelve weeks, the Down Down tickets would not have been misleading,” O’Bryan wrote in his judgment. “That observation raises the question whether consumers were harmed by the conduct.”
However, shoppers at Coles on Thursday said the finding that Coles had deceived customers vindicated their suspicions. “They just seem to have gotten away with ripping people off,” said Deb Barnes, who was shopping at Coles in Melbourne’s Yarraville with her son Charlie on Thursday afternoon.
Charlie and Deb Barnes at Coles YarravilleRuby Alexander
Others were resigned to the supermarket sector’s behaviour. “If you’re going to get ripped off here, you’re going to get ripped off everywhere you go,” said Sally Walker outside the same Yarraville location.
Related Article
At a Coles in North Sydney, shopper Guy Hannan said the supermarkets needed to be reined in, adding, “They need to be more heavily regulated. They’ve got a lot of power.”
Yve Stewart, another Coles shopper, said the Coles case had eroded her trust in the major supermarket and its rival Woolworths. “They’re cheating, it’s simple. We all know,” Stewart said.
Four week prices weren’t ‘genuine’
The ACCC had argued that Coles artificially jacked up prices for hundreds of products for a brief period so it could claim the new prices were a reduction on its previous ones, when in fact the “Down Down” price was higher than just a few weeks before.
Coles defended the claims, arguing its discounts were genuine specials to help customers and sales after prices rose because of inflation.
O’Bryan found that Coles increased prices because suppliers wanted that to happen “in a commercially justifiable manner”.
But he said that the goods needed to be sold for 12 weeks at the higher price before customers would consider the discounts genuine. Most of Coles’ products were at the higher price for just four weeks. As a result, O’Bryan found Coles had misled customers.
“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,” O’Bryan said. That misled customers, he found.
Highest penalties for breaches of the Australian Consumer LawPhoenix Institute of Australia: $438 million. For unconscionable conduct, after students were misled into thinking the vocational courses they were enrolling in were free.Australian Institute of Professional Education: $153 million. For unconscionable conduct, as well misleading or deceptive conduct, when enrolling consumers into online diploma courses that were promoted as “free” but incurred VET FEE‑HELP debts.Volkswagen: $125 million. For making false representations about compliance with Australia’s diesel emissions standards.
O’Bryan’s judgment comes ahead of his ruling in separate, but very similar proceedings against Woolworths by the ACCC, which he is also overseeing.
Coles said it was reviewing the judgment, which it could appeal, and emphasised that its prices had risen for genuine commercial reasons. “Our priority has always been – and will continue to be – delivering value to our customers,” a company spokesman said.
Coles’ “Down Down” program misled millions of customers into thinking discounts were genuine.Eamon Gallagher
“This case highlights the importance of clarity for both retailers and customers alike. And the need for clear, practical guidance on minimum price establishment periods to ensure the retail industry can avoid unnecessary litigation in future,” he said. Woolworths declined to comment, citing the ongoing litigation.
Assistant Minister for Competition Andrew Leigh said the decision was “an important win for shoppers, and a tribute to the ACCC’s patient, rigorous enforcement of consumer law”.
Related Article
Hefty penalty expected
Cass-Gottlieb said she was happy with the outcome of the case, which the commission brought because Coles’ pricing was making it hard for customers to find genuine value at the supermarket.
“The ACCC will seek a substantial penalty, reflecting the importance of accurate pricing for consumers and also because it is very important that a penalty is not just able to be dismissed as a cost of doing business, and that it becomes at a level that is a significant deterrent for such conduct,” she said.
While Cass-Gottlieb would not speculate on the size of a fine, given the ongoing parallel case against Woolworths, others said Coles would most likely receive a severe financial penalty.
In addition to penalties for breaking consumer law, which have run into the hundreds of millions of dollars in other cases, Coles could have to pay damages, including from a class action case linked to the ACCC’s proceedings.
Former ACCC chair Allan Fels said Coles’ penalties could easily exceed $100 million, and the financial penalties needed to be in the hundreds of millions to act as a deterrent.
“The repercussions for Coles now will be very big. I’d expect the fines to be very high, in the hundreds of millions of dollars in penalties,” he said.
Rod Sims, who preceded Cass-Gottlieb at the ACCC, said the decision set a precedent well beyond supermarkets.
“This is a big win for consumers because … it raises the bar for calling something a discount. You can’t just be flippant about it,” Sims said.
Gregory Mackey, special counsel at Gerard Malouf & Partners, which brought the related class action against Coles, said that, pending any appeals, the next step would be calculating damages and compensation.
Mackey said the class action represented an estimated 10 million customers, given an “opt-out” system with a deadline that passed last year. The lawyers plan to call experts before hearings to determine payout request, but Mackey expects it will be at least another year before that process proceeds.
“Because of its loyalty program, Coles has a very good record of who bought these items and for how much. Normally, we’d have no idea how to calculate this, but for a portion of these sales they have records which they can show the courts,” he said. Non-members could produce receipts or credit card statements as proof of purchase and a right to damages.
“We’ve done surveys which found people wait until a product is on special, because they trusted Coles, and then they bought in bulk. They may not have bought it at all,” he said.
The ACCC alleged Coles misled shoppers in relation to “Down Down” pricing across 245 products when filing the initial legal action.
But for the two-week hearing, the parties agreed to focus on a small number of products sold between January 2021 and May 2023, including two-litre bottles of Coca-Cola, Colgate toothpaste, 900-gram tins of Karicare baby formula, Rexona deodorant, Lurpak butter and a box of Arnott’s Shapes.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Save
You have reached your maximum number of saved items.
Remove items from your saved list to add more.
Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.
Jack Gramenz is a breaking news reporter at The Sydney Morning Herald.Connect via email.From our partners