Australian Court Finds Coles Misled Shoppers With Fake Discounts

An Australian Federal Court judge ruled Thursday that supermarket chain Coles misled consumers by advertising non-genuine discounts on a range of household items. The case was brought by the Australian Competition and Consumer Commission (ACCC) over Coles’ “Down Down” promotions. The ruling sets up later court hearings to determine penalties that could be significant.

Justice Michael O’Bryan found that Coles temporarily increased prices on 13 of 14 sample products before applying discounts, which the couSources said misrepresented the savings offered to customers. The judge said the “Down Down” tickets would not have been misleading if the products had been sold at the higher “Was” price for a minimum period of 12 weeks immediately before the promotion.

The ACCC alleged Coles misled shoppers on prices for 245 products over 15 months, from February 2022 to May 2023. The products cited included items such as toothpaste and biscuits. The court’s findings on the sample products supported the watchdog’s broader claim that the promotions were not “genuine” discounts.

Coles said it is reviewing the judgment. The company had rejected the allegations during the proceedings and said its priority has been delivering value for customers.

Competition watchdog scrutiny of major grocers

Coles and Woolworths together account for about two-thirds of Australia’s grocery market and have faced heightened scrutiny in the past year over alleged pricing and competitive practices. O’Bryan is also presiding over a similar ACCC case against Woolworths.

The ACCC has alleged Woolworths misled consumers about 266 products over 20 months. A decision in that matter is expected later this year.

Penalties and possible industry impact

The court will determine penalties for Coles at subsequent hearings, with any fine to be decided later. The decision could influence how Australian retailers set reference prices and design discount campaigns, particularly around how long a “Was” price must be established before a promotion can be marketed as a genuine saving.

Further proceedings will focus on remedies and penalties, and the outcome of the Woolworths case will be closely watched by the retail sector and regulators.