Australia’s competition watchdog has taken a major step forward in its legal action against supermarket giants Woolworths and Coles, after all parties agreed on key facts surrounding hundreds of grocery items at the centre of the case.
The Australian Competition and Consumer Commission (ACCC) alleges that both retailers misled customers by promoting discounts on around 250 grocery products that weren’t genuine. The promotions in question are said to have created a false impression of savings, when in some cases, the prices had been increased shortly before the so-called discounts were applied.
With agreement now reached on pricing, promotion dates and product details, the Federal Court can focus directly on the central question of whether either supermarket broke consumer law.
Woolworths and Coles have denied wrongdoing, maintaining that any price changes were legitimate and largely driven by supplier requests. They argue the promotions were consistent with industry practices and not designed to mislead.
According to new court documents, Woolworths ran 276 promotions across 266 unique items, while Coles had 255 promotions on 245 products. The case revolves around two prominent pricing strategies: Woolworths’ “Prices Dropped” and Coles’ “Down Down” campaigns.
The ACCC’s case against Woolworths focuses on the period between September 2021 and May 2023. For Coles, the promotions in question ran from February 2022 to May 2023. Woolworths originally launched its “Prices Dropped” campaign in 2015 in response to customer concerns about the short duration of traditional specials, known in the industry as “high-low” promotions.
Unlike these short-term specials, the “Prices Dropped” strategy was designed to reduce prices over an extended period — sometimes up to a year — and used different signage to make it stand out from short-term discounts.
However, the ACCC argues that in some cases, the new prices under this scheme were actually higher than earlier prices offered when supplier funding had supported deeper discounts. Without that supplier backing, some items were listed at inflated prices but still promoted as being part of a discount program.
Products highlighted in court documents include coffee pods, pet food, soft drinks, snacks and household items. In one example, a bottle of soft drink was advertised as on sale at Woolworths despite being priced 33% higher than it had previously been. At Coles, a similar case involved a bottle of Coca-Cola, which was promoted as a special despite a 28% price rise.
The ACCC claims this pricing tactic created the illusion of value, encouraging customers to believe they were securing a bargain, when in fact the items may have cost more than before.
A central issue in the case is the role of supplier funding, which the ACCC says often determined whether or not a product was included in the promotion. When that support ended, the product could still be promoted under the program but at a higher price point.
The court documents indicate that lawyers from both sides are working to narrow the focus of the case by selecting a sample of 12 to 16 products to be used as test cases. This would avoid the need for an exhaustive trial covering all 250-plus items.
The judge overseeing the case has already expressed concern about the scale of the proceedings and is encouraging a practical and efficient approach. With the factual groundwork now settled, the court will move on to determine whether the conduct in question breached consumer law.
The outcome could have significant consequences for the way retailers promote pricing in Australia. If the court finds that the supermarkets misled customers, it may lead to tighter regulations and greater scrutiny over future promotions in the industry.
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