The Australian Competition and Consumer Commission (ACCC) has launched legal action against Woolworths and Coles.
The ACCC alleges that the supermarket giants breached consumer law by misleading consumers through discount pricing claims on hundreds of products.
The ACCC has alleged both companies sold items at regular prices for up to six months, then increased the prices of those items by at least 15 per cent before placing them in the ‘Prices Dropped’ Woolworths promotion or ‘Down Down’ Coles promotion.
The ACCC alleges up to 266 products were involved in pricing claims by Woolworths at different times over an estimated 20-month period and 245 products for Coles over a period of about 15 months.
Some of the Woolworths products included Tim Tams, Dolmio sauces, Doritos salsa, Energizer batteries, Kellogg’s cereals and hundreds of others.
Coles products included Arnott’s Shapes biscuits, Band-Aids and Cadbury chocolates.
“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products,” ACCC chair Gina Cass-Gottlieb said.
“However, in the case of these products we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price.”
In a statement, Woolworths Group said it would carefully review the claims made by the ACCC and continue to engage with the ACCC on the matter.
“Cost-of-living pressures remain a key issue for millions of Australians who shop with us every week,” CEO Amanda Bardwell said.
“Our customers are telling us they want us to work even harder to deliver meaningful value to them and it’s important they can trust the value they see when shopping our stores.
“Our Prices Dropped program was introduced to provide our customers with great everyday value on their favourite products.
“We remain committed to offering many ways for customers to save at the checkout, including thousands of weekly specials, everyday low prices on household essentials, a great value own brand range and through our Everyday Rewards program.”
Coles said it would defend the proceedings brought against it.
In a statement, the company said the allegations related to a period of significant cost inflation when Coles was receiving a large number of cost price increases from suppliers.
“Coles’ own costs were rising, which led to an increase in the retail price of many products,” it said.
“Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers though the recommencement of promotional activity as soon as possible after the establishment of the new non-promotional prices.”
Last year, Coles announced it would refund thousands of customers after CHOICE complained to the ACCC about the supermarket giant’s pricing.
The ACCC said it identified the conduct through consumer contacts and social media monitoring.
“We allege these misleading claims about illusory discounts diminished the ability of consumers to make informed choices about what product to buy and where,” Ms Cass-Gottlieb said.
The ACCC estimates the two companies sold tens of millions of products using this method and derived significant revenue from it.
The watchdog said it would seek community service orders that Coles and Woolworths must each fund a registered charity to deliver meals to Australians in need.
Other court action by ACCC
The ACCC has previously taken legal action against other companies such as Qantas for breaching consumer law.
In May, Qantas reached an agreement with the ACCC after the watchdog took legal action against the airline for selling seats on flights that had already been cancelled.
As part of the settlement Qantas was forced to remediate affected passengers with payments ranging from $225 for domestic customers to $450 for international customers — totalling about $20 million.
The payments were in addition to any remedies already offered by Qantas, such as alternative flights or refunds.
Qantas was also ordered to pay a $100 million civil penalty to the federal government for breaching the Australian Consumer Law.
At the time, Ms Cass-Gottlieb described the airline’s conduct as “egregious and unacceptable”.
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Hallelujah!! About time this practice was stopped!! These tactics by Woolworths & Coles have driven us from purchasing our weekly shop at their stores. Thank goodness we have competition in our area and no longer need to shop at Woolies or Coles. Don’t think that consumers don’t notice these crooked tactics, we certainly do. It is a total disgrace when folk are struggling to feed their families. Thank you Choice and The ACCC!!
When I shop in any supermarket and there is a Discount Price Displayed, I always try to ascertain what the “normal price is” , and if it is the same as the discount price, the I just walk passed and ignore it, because it is NOT a discount, it’s a ploy to get you to purchase itr thinking that it is a discounted price.
This goes for ALL Supermarkets not just Cole & Woolworths.
Also you do need to know what the “normal” price is !!!!