Australia's Major Supermarket Chains Accused of Misleading Discount Claims
Australia's two largest supermarket chains, Coles and Woolworths, are being sued by the Australian Competition and Consumer Commission (ACCC) for allegedly deceiving consumers with false price reduction claims. The ACCC asserts that both companies violated consumer law by temporarily increasing prices before dropping them to levels that were often equal to or even higher than the original price, while claiming the discounts were permanent.
Coles has vowed to defend itself in court, while Woolworths is reviewing the allegations. Combined, the two chains control roughly two-thirds of the Australian grocery market. Over the past year, both retailers have faced heightened scrutiny amid accusations of price gouging and anti-competitive behavior.
Prime Minister Anthony Albanese weighed in on the matter, calling the alleged actions "completely unacceptable" if proven true. He emphasized that such behavior undermines trust and is not in line with Australian values. "Customers deserve to be treated fairly, not as fools," Albanese said at a press conference where he also introduced draft legislation for a supermarket "code of conduct."
ACCC Chair Gina Cass-Gottlieb explained that Coles and Woolworths have long used marketing campaigns like 'Prices Dropped' and 'Down Down' to suggest permanent reductions in prices. However, the watchdog's investigation revealed that many of these discounts were misleading, affecting hundreds of products over a span of several months. Woolworths allegedly misled customers about 266 products over 20 months, while Coles did so for 245 products over 15 months.
The products involved in the allegations span a wide range, including pet food, Band-Aid bandages, mouthwash, and iconic Australian favorites like Arnott's Tim Tam biscuits, Bega Cheese, and Kellogg's cereal. According to the ACCC, the two supermarkets sold millions of these items, generating substantial revenue through the deceptive pricing practices.
Ms. Cass-Gottlieb emphasized the importance of accurate pricing during times of economic pressure, noting that many Australians depend on discounts to manage their grocery bills. "It’s vital that consumers can trust that discounts are real, especially with the rising cost of living," she said.
The ACCC is asking the Federal Court of Australia to impose substantial fines on Coles and Woolworths, as well as an order that they expand their charitable meal delivery programs.
In a statement, Coles acknowledged that rising costs have impacted product prices, but stressed that the company aims to balance those increases with providing value to customers. Coles also underscored its commitment to consumer law and building trust with all stakeholders. Woolworths echoed similar sentiments, stating that it is willing to engage with the ACCC and that it remains focused on delivering meaningful value to shoppers.
In response to the growing concerns, the Australian government has launched a review of the country's Food and Grocery Code of Conduct. The review recommended strengthening the code and giving the ACCC greater powers to enforce compliance. The proposed new code aims to protect suppliers and consumers alike, with harsh penalties for companies that breach its standards.
As the legal battle unfolds, the case highlights the increasing pressure on Australia’s supermarket sector to operate transparently and fairly in an era of rising living costs.
