ACCC accuses Coles of ‘planned’ campaign to mislead customers
Supermarket giant Coles has been accused of a “planned” campaign to mislead customers over price discounts on the first day of a bombshell Federal Court case.
The consumer watchdog, the Australian Competition and Consumer Commission (ACCC), is suing the supermarket giant in a lawsuit that a former ACCC boss has called “the case of the century”.
The opening arguments today looked at the prices Coles charged for 245 common household products under its famous “Down Down” promotions. The promotional program has been in place since 2010.
The ACCC’s legal counsel, Garry Rich, claimed in his opening remarks Coles had jacked up its prices for a short period before discounting them to a price that was actually more than, or the same as, the regular price.
Mr Rich said Coles customers had been repeatedly deceived by the supermarket and the pricing was not “fair dinkum”.
“Why on earth are you telling your customers the price is going down? They’re not,”
he said.
Evidence would show the conduct was “planned” and Coles had “disguised” price rises as price discounts, he said.
Internal compliance documents from Coles about the “Down Down” program showed there were key changes to policy guardrails on the discount program before the allegedly misleading conduct, he added.
Mr Rich alleged all but one of the promotions would have been prohibited under the earlier policy and the price changes had more to do with the commercial consideration of chasing Woolworths on pricing.
Dog food pricing ‘utterly misleading’
There was also intense debate over the meaning of the price of dog food and what a reasonable shopper would have thought, with Justice Michael O’Bryan pushing back on important elements of the ACCC case.
For a period of almost 300 days between April 2022 and February 2023 Mr Rich told the court that Coles offered a 1.2 kilogram loaf of Nature’s Gift Wet Dog Food for $4.
The pricing of this Nature’s Gift dog food was the focus of the ACCC’s opening arguments. (ABC News: Patrick Stone)
Then for seven days the price rose by 50 per cent to $6.
On the eighth day the price was set at $4.50 — 13 per cent more than customers had been paying for all but seven of the previous 303 days — with Coles labelling the product “Down, Down”.
Mr Rich said while that statement was “literally true” it was also “utterly misleading”.
“It did not disclose that a reasonable consumer would not have understood that Coles had increased the price to $6 for just 7 days, immediately before the promotion, and that for 296 days before that, the price was $4,”
he said.
“By making the statement it did, without disclosing those crucial qualifying facts, Coles led reasonable consumers into error.
“It caused them to assume that the “Down, Down” price of $4.50 was a genuine reduction to, or discount from, the previous regular price of the product. That assumption was wrong.
“A reasonable consumer who knew the real facts would not think the price of the dog food has gone down, nor would they think that a price of $4.50 would be a genuine reduction or discount.”
Coles has been accused of a “planned” campaign to mislead customers. (ABC News: Billy Cooper)
Justice O’Bryan pushed back and argued the first, or “regular” price, in the case of the dog food at $4 was “irrelevant”.
He said circumstances had changed due to an increase in costs and it was not a reasonable comparison with the “Down, Down” price of $4.50.
Mr Rich did not agree.
“You can’t tell that the second price is a short-term price unless you understand the history of the product,” he said.
Coles defence to come
Coles is defending the case and has rejected the ACCC’s allegations in court documents.
It will also get its chance to rebut the consumer watchdog when it makes opening arguments later today or tomorrow.
Coles will argue its customers were offered genuine discounts and they were not illusory or fake.
The supermarket giant will say its price increases were justified due to inflation, which was at a 30-year high when the alleged misconduct occurred, and because and its suppliers were pushing for price increases.
Coles has reported record profits and been accused of price gouging in recent years, however this case will not offer a verdict on that.
An ACCC report last year found that Australia had one of the most profitable supermarket sectors in the world.
Andy Kelly says supermarkets must have clear, transparent price displays. (ABC News: Billy Cooper)
Consumer group CHOICE welcomed the Federal Court action and said supermarket promotions had a “significant influence” on how people made purchasing decisions.
“During a cost-of-living crisis, retailers should be doing all they can to ensure clear, transparent pricing — not obscuring rising prices with confusing promotions,” director of campaigns and communications Andy Kelly said.
“This court case is not only a wake up call for Coles, but for other retailers who may be engaging in similar practices.”
The trial continues.
