Coles and Woolworths will face court over allegedly misleading consumers in their ‘Down Down’ and ‘Prices Dropped’ campaigns.
The Australian Competition and Consumer Commission (ACCC) has started legal proceedings against the major supermarkets over allegedly breaching consumer law.
Prime Minister Anthony Albanese said the allegations were “serious”, adding: “If this is found to be true, it’s completely unacceptable. This is not the Australian spirit.”
“Customers don’t deserve to be treated as fools by the supermarkets. They deserve much, much better than that.”
The consumer watchdog reviewed 245 products at Coles across 15 months and 266 products at Woolworths across 20 months, alleging the supermarkets applied price hikes on items before dropping the cost, with discounted items selling above regular pricing.
ACCC chair Gina Cass-Gottlieb said Woolworths and Coles were misleading their customers with discounts that were “illusory”.
“We also allege that in many cases, both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price,” Cass-Gottlieb said.
The ACCC found some products had their prices increased by at least 15 per cent for brief periods before being placed in the discount promotions.
It conducted an in-depth investigation using industry contacts and social media monitoring.
The ACCC estimates tens of millions of products have been affected and argues that it diminishes the ability of consumers to make an informed choice.
The legal action follows a Senate inquiry into supermarket prices and calls for the sector to be overhauled to ensure people can afford everyday items during a cost of living crisis.
In a statement, Woolworths Group said it would carefully review the allegations and continue to engage with the ACCC on the matter.
“Our Prices Dropped program was introduced to provide our customers with great everyday value on their favourite products,” Woolworths Group CEO Amanda Bardwell said.
“We remain committed to offering many ways for customers to save at the checkout.”
Coles Group said it takes compliance with Australian consumer law “extremely seriously” and intended to defend the proceedings.
“The allegations relate to a period of significant cost inflation when Coles was receiving a large number of cost price increases from our suppliers and, in addition, Coles’ own costs were rising, which led to an increase in the retail price of many products,” it said in a statement to the Australian Securities Exchange on Monday.
“Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers through the recommencement of promotional activity as soon as possible after the establishment of the new non-promotional price.”