The Australian Competition and Consumer Commission (ACCC) has launched legal action against the country’s two largest supermarket groups for allegedly misleading consumers.
The competition watchdog claims Woolworths and Coles breached Australian consumer law by making misleading claims on hundreds of common supermarket products.
It has issued separate proceedings against the grocers in the country’s Federal Court.
In a statement issued today (23 September), the ACCC said the allegations relate to products sold by 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 products were then subject to price rises of at least 15% for brief period 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.
ACCC Chair Gina Cass-Gottlieb said: “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.
“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 alleges the conduct involved 266 products for Woolworths at different times across 20 months and 245 products for Coles at different times across 15 months. The representations were made on pricing tickets displayed to consumers in-store on supermarket shelves and online, usually with a ‘was’ price displayed showing what the price was during the short-term price spike and the date of that price.
It estimates that Woolworths and Coles sold tens of millions of the affected products and “derived significant revenue” from those sales.
Products involved include Arnott’s Tim Tams biscuits, Dolmio sauces, Kellogg’s cereal, Mother energy drinks and Sprite soft drinks.
The ACCC is seeking "declarations, penalties, costs and other orders". It is also seeking community service orders that Woolworths and Coles must each fund a registered charity to deliver meals to Australians in need.
Woolworths, which runs the largest supermarket chain in Australia with about 1,140 stores across the country, said it will carefully review the claims and continue to engage with the ACCC on the matter.
Group CEO Amanda Bardwell said: “Cost-of-living pressures will 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.
“Our Prices Dropped programme was introduced to provide our customers with great everyday value on their favourite products.”
Coles said it intends to defend the proceedings.
In a stock exchange statement, Coles said: “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 May, an Australian Senate inquiry into alleged 'price-gouging' recommended that divestiture laws should be introduces to break up the country's supermarket duopoly.
