Court rules Coles misled shoppers with its ‘Down Down’ discount campaign

Coles misled Australian shoppers with fake discounts on everyday grocery products, the federal court has ruled in a landmark decision for the supermarket industry.

Justice Michael O’Bryan handed down his judgment on Thursday, delivering a significant blow to Australia’s second-largest supermarket chain, which had argued the discounts represented genuine savings during a period of high inflation.

The Australian Competition and Consumer Commission (ACCC) sued Coles and rival Woolworths, accusing the supermarket giants of duping shoppers by using promotional programs to disguise price increases on hundreds of products.

In the Coles case, the supermarket sold 245 products at one price for a median period of a year, before being increased to a second price, for a median of just 28 days, before reducing them to a third price which was more expensive or equal to the first price.

The strategy is known as “was/is” comparative pricing: Coles advertised products to shoppers with “Down Down” promotional tickets that displayed their new, supposedly discounted “is” price next to the higher “was” price.

But the supermarket did not disclose on the tickets that the “was” prices had been in place for only a short period and that the items were sold at a cheaper price before that.

During its trial in February, Coles conceded that by the time it raised the price of an item from the original to the “was” price, the supermarket had already planned and agreed with the supplier on what the new “Down Down” price would be.

Legal counsel for the supermarket, however, argued that the promotional prices were genuine discounts offered to shoppers after an increase in wholesale costs charged by suppliers during a period of rising inflation.

Reading a summary of his judgment in a Melbourne court room on Thursday, O’Bryan agreed the price increases were done in “ordinary commercial way” and Coles had been meeting requests from suppliers.

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However, the judge upheld the ACCC’s allegation that Coles falsely promoted “discounts” on these products based on increased prices that had been available for too short a period.

O’Bryan said if the average shopper had known the “was” prices on the items’ promotional tickets had been in place for such a short amount of time, they would not have thought the discounts were genuine.

He found the supermarket giant had engaged in misleading conduct, in contravention of the Australian consumer law.

O’Bryan is yet to hand down his decision in the ACCC’s similar case against Woolworths, which was heard in the federal court in Sydney in late April and early May.

More updates soon…