Court to rule on Coles’ alleged ‘fake’ discounts

The decision, which will be handed down today by Judge Michael O’Bryan, could change the way supermarkets operate

The Australian Competition and Consumer Commission has brought separate but similar cases against the country’s two dominant supermarket chains, with a Woolworths lawsuit awaiting a decision at a later date.

In both cases, it is alleged that the supermarkets misled consumers by raising prices for a short time before lowering them above the original price and marketing them as a discount.

In one case, a can of Nature’s Gift dog food was on sale for $4 for almost a year before the price was briefly raised to $6.

It was then sold under a “Down Down” ticket for $4.50.

The watchdog identified hundreds of products in the Coles campaign and a similar “Prices Dropped” push from Woolworths that followed a similar formula.

In separate hearings, lawyers for the supermarkets argued that prices rose due to inflationary pressures and that the discounts were real.

Jeannie Paterson, a consumer law expert at the University of Melbourne, said the outcome in the case against Coles was too close.

“People feel sad that this price increase happened in the short term before the price was reduced – but strictly speaking the marketing was accurate,” she told AAP.

If Coles is found to have misled its customers, it could mean “colossal” fines for the retailer and change the way all supermarkets do business, Paterson says.

“Even if Coles wins, we will see a lot of cynicism around promotional offers and prices,” she said.

ACCC lawyer Garry Rich SC argued during hearings that Coles was trying to avoid losing customers by disguising price increases as discounts.

“Why on earth are you telling your customers that your prices are going down? They’re not,” he told the court.

But Coles’ lawyer John Sheahan argued that “ordinary, reasonable consumers” knew prices were generally rising due to inflation.

The consumer watchdog’s case could be damaged by the fact that very little evidence has been provided about shoppers’ habits and their understanding of discount campaigns, Patterson said.

A ruling against Coles would be instructive – but not definitive – in predicting the court’s decision in the Woolworths case, she added.

“There are some differences in the evidence presented in the two cases,” Patterson said.

“Woolworths will be watching very closely.”

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