Supermarket giant Coles has been accused of misleading customers on the first day of a Federal Court trial.
The Australian Competition and Consumer Commission (ACCC) is suing Coles over claims it breached consumer law by using “illusory” discounts. Coles denies wrongdoing.
It is the first of two cases against Australia’s major supermarkets. A trial against Woolworths will begin later in the year.
The consumer watchdog alleges both retailers “derived significant revenue” from selling “millions” of deceptively priced products.
Background
Coles and Woolworths control around two-thirds of the supermarket sector.
In the 2025/26 financial year, Coles reported a net profit of $1.1 billion.
In September 2024, the watchdog announced it was suing the major supermarkets in separate lawsuits.
The ACCC analysed the price of hundreds of Coles grocery items from February 2022 to May 2023, and accused the supermarket of using misleading pricing across 245 products.
Claims
The ACCC accused Coles of “price spiking” several of its products — a practice where the price of an item is increased briefly before it’s ‘reduced’ to a price that is more expensive, or the same as, before the spike.
For example, Coles sold Strepsils Honey & Lemon Lozenges for $5.50 for around two years. It increased the price to $7 in October 2022.
The next month, the Strepsils were advertised with the supermarket’s “Down Down” discount label for $6.00 — $0.50 higher than the original price.
The “Down Down” promotion has been running at Coles since 2010.
It advertises discounted prices on items for sustained periods of times, rather than short-term sales.
The tickets look like this:
Trial
The ACCC trial began in the Federal Court on Monday, with the watchdog accusing Coles of using its “price spiking” and its “Down Down” tags to unlawfully mislead customers.
On day one of proceedings, the ACCC’s barrister Garry Rich SC told the court:
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“Why on earth are you telling your customers that your prices are going down, when they’re not?”
He called the “Down Down” campaign “an utterly inappropriate promotional mechanic to use in circumstances where everyone within Coles knows the price is going up.”
The ACCC website includes examples of “ways that a displayed price can be misleading”. This includes: “Stating the sale price is marked down from an earlier price when:
- The items were not sold at that price for a reasonable period right before the sale started, or
- Only a very small proportion of items were sold at that price right before the sale.”
Part of this case will include determining what a “reasonable period” is.
Defence
Coles has rejected the ACCC’s claims.
Its defence is expected to centre on supplier costs. Coles will also argue that 245 products identified by the ACCC were temporarily removed from the “Down Down” promotion.
In November 2024, the supermarket said the affected products were “sold at the non-promotional price... for up to six weeks,” before re-entering the “Down Down” program.
In opening arguments, lawyers for Coles said customers were aware of price fluctuations before purchasing products.
What’s next?
The ACCC is seeking “significant” cost penalties for Coles.
It will also seek mandatory community service orders, which would require the supermarket to fund a registered food/meal service charity.
The ACCC is seeking similar penalties for Woolworths in separate proceedings.
The trial is expected to continue over the next two weeks.
The Coles case will also serve as a precedent for the trial against Woolworths, which is set to commence in April.
When the watchdog announced it was suing both supermarkets in 2024, ACCC Chair Gina Cass-Gottlieb said, “Many consumers rely on discounts to help their grocery budgets stretch further, particularly during this time of cost-of-living pressures.”
“It is critical that Australian consumers are able to rely on the accuracy of pricing and discount claims.”
