Woolworths engaged in ‘marketing magic’ to trick customers, consumer watchdog tells court

Woolworths engaged in “marketing magic” to trick customers into thinking they were getting genuine discounts as part of the supermarket’s “Prices Dropped” promotion, the consumer regulator has told a court.

The landmark trial between the Australian Competition and Consumer Commission (ACCC) and Woolworths began in the federal court in Sydney on Tuesday, almost two months after hearings ended in its very similar case against Coles.

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.

During the ACCC’s opening statements on Tuesday, Justice Michael O’Bryan pressed the consumer watchdog’s lawyers on one of its central claims.

Sign up for the Breaking News Australia email

The ACCC alleges that, between September 2021 and May 2023, Woolworths temporarily increased the prices of at least 266 products before placing them on “Prices Dropped” promotions to make shoppers think they were getting a discount.

The strategy is known as comparative or “was”/“is” pricing.

The third “discounted” price was in most cases higher than the original long-term price had been before the short-term price spike, which the ACCC argues was a deliberate strategy to soften price increases that had been planned in advance.

Court documents show the products were sold at their first price for 180 days or longer, before their prices were increased by at least 15% but only for a period of 45 days or less.

O’Bryan questioned whether the length of time the items were sold at the second, increased price was relevant to the ACCC’s argument that Woolworths had falsely communicated to customers they were getting a discount on the third price.

He said shoppers probably would not analyse the “was/is” prices on an item’s promotional ticket to such a degree, and the ACCC’s case relied on a “level of analysis that consumers aren’t going to think about”.

“Whether … the saving is … real might depend upon a range of factors including the period [of time] in which the ‘was’ price had been in the market, but also including how was the ‘was’ price established,” he said.

O’Bryan asked similar questions of the ACCC in its case against Coles in February. On Tuesday, the watchdog’s barrister, Michael Hodge, pushed back.