Consumer watchdog zeroes in on Woolworths’ allegedly fake discounts as it meets supermarket giant in court

The consumer watchdog is back in court and taking on Australia’s largest supermarket chain, alleging Woolworths deliberately misled shoppers with fake discounts.

The Australian Competition and Consumer Commission’s (ACCC) case against Woolworths begins in the federal court in Sydney on Tuesday, almost two months after hearings wrapped up in its very similar case against Coles.

This time, rice crackers, Tim Tams, apple cider vinegar, pasta and Oreos are among the everyday groceries whose shifting shelf prices will be scrutinised over a fortnight.

The ACCC alleges Coles and Woolworths broke Australian consumer law by offering “illusory” discounts on hundreds of everyday products through the misleading use of their respective “Down Down” and “Prices Dropped” promotion programs.

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Led by Robert Yezerski, SC, Woolworths’ legal team is expected to vigorously defend the allegations, with the supermarket saying it “fundamentally disagrees” with the ACCC’s claims and at no stage misled or deceived customers.

“Following COVID, there was a period of extraordinary inflation, and we were acutely aware that customers expected Woolworths to provide value wherever possible,” a Woolworths spokesperson said.

“Inflation also put pressure on our suppliers’ costs, and we worked with them to reduce the inflationary impact on customers through our ‘Prices Dropped’ program.”

The Woolworths hearings come at a time of significant economic upheaval and widespread consumer concern about the cost of living amid a fresh bout of inflation and the prospect of more interest rate rises.

The major supermarkets are also facing requests from suppliers to raise prices to help farmers cover drastically inflated fuel and fertiliser costs caused by the US-Israel war on Iran.

The ACCC launched the litigation against Coles and Woolworths in 2024 after a period of sharp grocery price increases and with the major supermarkets suffering reputational damage after being the focus of a string of parliamentary inquiries.

While Justice Michael O’Brien is yet to hand down a decision in the Coles matter, the ACCC is expected to make a similar argument in its case against Woolworths.

The ACCC alleges that, between September 2021 and May 2023, Woolworths temporarily increased the prices of at least 266 different products before placing them on “Prices Dropped” promotions at prices which were higher than, or the same as, their prices before the price spike.