Supermarket giants Woolworths and Coles have firmly denied claims of misleading discounts, stating that most of their price increases were driven by suppliers, making the later discounts real.
The Australian Competition & Consumer Commission (ACCC) has accused the two retailers of deceiving customers. However, Woolworths and Coles argue that the price hikes were necessary to reflect rising costs from their suppliers, caused by high inflation. This, they claim, makes the later discounts legitimate rather than the “fake” discounts the ACCC alleges.
Their defence hinges on the fact that the initial price increases were genuine responses to supplier demands, which were a result of rising production costs. Woolworths and Coles insist that these price increases are the baseline from which their promotions should be evaluated.
When the ACCC launched the case last month, Chair Gina Cass-Gottlieb accused the retailers of offering “illusory” discounts. In court, Woolworths’ legal counsel, Cameron Moore SC, described the ACCC’s case as “misconceived” and insisted that the price reductions offered to customers were genuine. Coles’ counsel, John Sheahan KC, echoed this, stating that in almost all instances, the price increases on more than 250 products tracked by the ACCC were due to supplier cost increases during a period of high inflation.
Sheahan explained that to assess whether the discounts were genuine, it’s essential to consider the original price, which was driven by actual supplier cost increases. He argued that the term “illusory” implies some manipulation of the original price, which both retailers deny.
On the other hand, ACCC counsel Sarida McLeod dismissed these arguments, maintaining that regardless of the supermarkets’ justifications, their actions were still misleading.
The ACCC alleges that Woolworths and Coles inflated prices on hundreds of everyday products, then offered slight price reductions, claiming these as discounts, even though the so-called “discounted” prices were higher than the average prices before the promotion. This, the ACCC claims, misled shoppers with deceptive discounts.
Both retailers have remained silent on the allegations since the case was filed, but during a court hearing on Wednesday, they laid out the initial framework of their defence.
Sheahan emphasised that Coles doesn’t view this as a simple case. Coles closely examines price hike requests from suppliers to ensure they are justified. Moore added that Woolworths did not raise prices temporarily to create the appearance of a discount, as the ACCC suggests. Instead, any price increases were driven by suppliers’ needs, making subsequent price drops genuine reductions.
While both Woolworths and Coles face similar charges, the cases could be split as new details emerge. McLeod acknowledged that many facts, like the prices displayed on shelves, might not be disputed. However, as more information comes to light, the two cases may require separate handling.
The Federal Court recently released new documents, detailing the ACCC’s claims that over 250 products, including pet food, fly spray, infant formula, and chocolate biscuits, were subject to artificial price hikes before being sold with discounts of up to 39%, which the regulator argues were deceptive.
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