Supermarket giants Woolworths and Coles faced a federal court in Melbourne for the first time since the Australian Competition and Consumer Commission (ACCC) initiated legal action against them for alleged deceptive discount practices.
During a court appearance on Wednesday, representatives from the supermarkets attributed recent price increases to suppliers requesting higher costs amid what they described as a “sudden outbreak of high inflation.” This follows allegations from the ACCC that the companies misled consumers by advertising illusory discounts on a wide range of everyday products.
John Sheahan KC, counsel for Coles, stated that his client would demonstrate that the price spikes were a direct result of suppliers’ requests for price hikes due to rising costs associated with inflation. He emphasized the need to evaluate the actual discounted price against the real increases in product costs, calling this legal case “very significant” for the entire industry, including suppliers, retailers, and consumers.
On the other hand, Cameron Moore SC, representing Woolworths, criticized the ACCC’s claims as “misconceived,” asserting that it was inaccurate to suggest that supermarkets instigated temporary price hikes. “Any price increases were initiated by suppliers… in response to rising costs,” he explained.
In rebuttal, Sarida McLeod, representing the ACCC, asserted that the supermarkets’ explanations were not surprising and maintained that their conduct was still misleading. Last month, the ACCC took legal action against the two major retailers, claiming they had violated consumer laws by allegedly inflating grocery prices before advertising them as discounted promotions.
Justice Michael O’Bryan indicated that he would oversee the case management hearings for both supermarkets together, although each case would be heard separately. Another case management hearing is set to be scheduled in the future.
The ACCC’s latest court filings highlight 276 promotional items from Woolworths and 255 from Coles, alleging that the supermarkets inflated prices shortly before marketing them as discounts. For example, Woolworths reportedly sold Arnott’s Tim Tams at $4.50 for 617 days, only to raise the price to $6 for 21 days before advertising them at a promotional price of $5.50—a move that actually resulted in a 22% price increase.
In another instance, the ACCC found that Woolworths sold Maggi beef noodles in discount promotions for 30% more than their regular price. Similarly, Coles allegedly raised the price of L’Oréal anti-wrinkle moisturizers from $15 to $24 before rolling them out in discount promotions at $18, which was still 20% higher than their previously regular price. Additionally, a MasterFoods marinade was reported to be sold by Coles at 33% above its regular price during promotional sales.
The alleged consumer law violations encompass a broad range of product categories, with snacks, pantry staples, beverages, cosmetics, and pet food all included in the ACCC’s findings.
