Supermarket Sued Over Misleading "Prices Dropped" Claims

Australia’s competition regulator has taken Woolworths to court over allegations that a major discount campaign misled shoppers. The Australian Competition and Consumer Commission (ACCC) said it began legal proceedings against the supermarket group in the federal court in Sydney on Tuesday. The case centres on Woolworths’ “Prices Dropped” promotion and whether it conveyed genuine savings to consumers.

The ACCC alleges Woolworths engaged in misleading conduct by offering what it described as “illusory” discounts on at least 266 products between September 2021 and May 2023. According to the regulator, Woolworths temporarily lifted prices on certain items and then applied “Prices Dropped” labels. The ACCC says that sequence created the impression of a discount when, in many cases, the promoted “dropped” price remained above the earlier long-term price that existed before the temporary increase.

The regulator’s claim focuses on comparative, or “was/is”, pricing. In this approach, a lower price is displayed alongside a higher “was” price, signalling a reduction. The ACCC argues that the “was” price in the promotion was sometimes a short-lived, higher price point, and that the “dropped” price could still exceed the prior regular level. The ACCC alleges this was a deliberate method to obscure planned price rises while presenting them as discounts.

In court, Justice Michael O’Bryan questioned the ACCC’s underlying assumption about consumer behaviour, raising doubts about whether shoppers would examine price history in the way the regulator’s case implies. The ACCC’s barrister, Michael Hodge, responded that consumers interpret a “Prices Dropped” ticket as indicating a real reduction from the normal shelf price.

Woolworths, represented by Robert Yezerski, SC, disputed the regulator’s framing and pointed to the broader economic environment during the period in question.

Woolworths’ position, as presented in the proceedings, is that the timeframe was characterised by high inflation and rising supplier costs, and that consumers would have expected prices to move. The trial is set to examine 12 specific products, including Lucky Dog Bones, as test cases to assess the ACCC’s allegations. The court’s findings on those items will be central to determining whether the “Prices Dropped” promotion breached Australian consumer law as alleged.