The Australian Competition and Consumer Commission’s (ACCC) Federal Court action against Woolworths and Coles has commenced.
The consumer watchdog is suing the supermarket giants infor allegedly misleading customers.
It claims the retailers breached consumer law by using deceptive “discount pricing claims”. It alleges Coles and Woolies “derived significant revenue” from selling “millions” of these products.
Lawyers for both supermarkets have blamed suppliers, saying pricing practices are based on their demands.
Duopoly
Coles and Woolworths control around two-thirds of the supermarket sector. A Senate inquiry earlier this year called the companies a “duopoly”. This is when two businesses control an overwhelming majority of an industry.
In the 2023/24 financial year, Coles’ net profits were $1.1 billion. Woolworths reported a $1.7 billion profit for the same period.
The ACCC is currently conducting a separate inquiry into supermarket price-setting for the Federal Government. Its final report is due in February.
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Allegations
The ACCCthe retailers use the “Prices Dropped” (Woolies) and “Down Down” (Coles) tags to unlawfully mislead customers.
It argues the retailers use “price spiking” — when products briefly become more expensive before being “reduced” to a price that is more expensive, or the same as, before the spike.
The ACCC is seeking “significant” cost penalties from the supermarkets, and a mandatory order for the companies to fund a registered food/meal service charity.
Defense
Coles’ barrister John Sheahan told the court price increases were a product of suppliers also experiencing “a period of sudden high inflation”.
He argued that when suppliers requested price increases on their products, “they were tested and investigated by Coles” to ensure they were well-founded.
Woolworths’ barrister Cameron Moore told the court “the ACCC’s case is misconceived”.
