Coles has been found to have misled customers by presenting price rises as discounts in its “Down Down” campaign, following a landmark case brought by the consumer watchdog.
Federal Court Justice Michael O’Bryan ruled on Thursday that Coles deliberately masked price increases as savings. In his decision, he found the supermarket’s discount signage gave shoppers a false impression.
“13 of the 14 ‘Down Down’ tickets that were the subject of consideration in the joint liability trial were misleading because the relevant products were not sold at the ‘was’ price stated on the ticket for a reasonable period,” Justice O’Bryan said.
“As a consequence, the discount represented on the tickets was not genuine.”
The ruling leaves the $28 billion supermarket giant facing potentially substantial penalties.
The Australian Competition and Consumer Commission launched separate but similar legal action against Coles and Woolworths, the nation’s two biggest supermarket chains. A decision in the Woolworths case is still to come.
The cases centred on claims that the supermarkets temporarily lifted prices, then reduced them to a level still higher than the original amount, before promoting the new price as a discount.
One example raised in court involved a can of Nature’s Gift dog food. It had sold for $4 for almost a year, before briefly rising to $6. It was later advertised under a “Down Down” ticket at $4.50.
The ACCC examined hundreds of products promoted through Coles’ campaign and Woolworths’ similar “Prices Dropped” promotion, alleging both used the same approach.
In court, lawyers for the supermarkets said the price changes were driven by inflation and that the advertised discounts were legitimate.
However, ACCC barrister Garry Rich SC argued Coles was attempting to stop customers from walking away by dressing up higher prices as bargains.
“Why on earth are you telling your customers your prices are going down? They’re not,” he told the court.
Coles barrister John Sheahan responded that “ordinary, reasonable consumers” understood prices were generally rising because of inflation.
