Modern Australian
Times Advertising

Woolworths and Coles sued by ACCC for allegedly misleading shoppers over the price of more than 500 products

  • Written by Jeannie Marie Paterson, Professor of Law, The University of Melbourne

At a time most people are trying to cut their weekly grocery bills, Australia’s supermarket giants have been hit with legal action for allegedly misleading shoppers over the price of hundreds of products.

The Australian Competition and Consumer Commission (ACCC) on Monday announced it was launching separate actions in the Federal Court against the largest and second-largest grocery chains, Woolworths and Coles.

The ACCC alleges the two have systematically misled consumers over price discounts on hundreds of everyday products. The ACCC chair, Gina Cass-Gottlieb, said the alleged wrongdoing involved the sales of “tens of millions” of products, reaping “significant” extra revenue for the businesses.

Woolworths’ list of 266 items included Arnott’s Tim Tams, Dolmio sauces, Doritos salsa, Friskies cat food, Kellogg’s cereal and Stayfree pads, while the 245 products allegedly targeted by Coles included Arnott’s Shapes biscuits, Band-Aids, Bega cheese, Cadbury chocolates and Libra tampons.

These were not one-off pricing errors. The ACCC alleges the misleading conduct took place over 20 months as part of the Woolworths “Prices Dropped” and the Coles “Down, Down” promotional campaigns.

How shoppers were allegedly misled

The ACCC alleges on repeated occasions the supermarkets’ strategy was to temporarily raise the price of goods before applying the so-called discount.

The approach meant that although the boldly placed, coloured discount tickets showed a reduction from the previous “regular” price of the products, the discounted price was still higher than the price before the temporary price rise.

The ACCC gave the example of how consumers were allegedly misled over savings on a 370-gram family pack of Oreo original biscuits.

From at least January 1 2021 until November 27 2022, Woolworths offered the Oreos for sale at a regular price of $3.50 on a pre-existing “Prices Dropped” promotion. Then, on November 28 2022, the price was increased to $5.00 for 22 days.

On December 20 2022, the product was placed on a “Prices Dropped” promotion with the tickets showing a “Prices Dropped” price of $4.50 and a “was” price of $5.00. The “Prices Dropped” price of $4.50 was in fact 29% higher than the product’s previous regular price of $3.50.

What is the legal claim?

The ACCC does not regulate prices. Instead, it acts on breaches of the Competition and Consumer Act 2010, including making false or misleading claims about the prices of goods and services.

While it was true that Woolworths and Coles reduced the shelf price of the products, the ACCC alleges they didn’t reveal that the starting price had recently been increased. It is this conduct of promoting a discount from a recently inflated price that the ACCC says would mislead consumers.

The ACCC’s argument is the “ordinary and reasonable” consumer expects a discount to be genuine, not coming off a recently inflated price. The net effect of that strategy is just an increased price.

Other cases

This is not the first time the ACCC has pursued such a claim. In 2020, the commission successfully went after online retailer Kogan for engaging in a similar strategy.

Kogan ran an online promotion advertising to consumers that they could use the code TAXTIME to reduce prices by 10% at the checkout. The court found the ads conveyed false or misleading representations because Kogan had increased the prices of more than 600 of its products immediately before the promotion by at least 10% per cent.

A similar strategy of offering discounts that were not genuinely delivered has also been raised against insurer IAG. The Australian Securities and Investments Commission (ASIC) alleges IAG did not deliver promised loyalty discounts to customers because their premiums were increased before the discount was applied by more than the amount of the discount.

IAG is now facing action for civil penalties from the regulator (ASIC) and a class action by affected customers.

Potential penalties Woolies and Coles might face

The ACCC is seeking fines (civil penalties) which could be significant. In the Kogan case, the Federal Court awarded penalties of $350,000.

But since November 2022, potential penalties have risen. These increases are designed to ensure companies do not treat the possibility of being penalised as a cost of doing business that is outweighed (and disregarded) by the benefits that might come from contraventions of the law.

Woman speaking at a lectern
ACCC chair, Gina Cass-Gotlieb said the alleged wrong doing reaped significant benefits for the businesses. Lukas Coch/AAP

These new penalty amounts work on a sliding scale: they start at $50 million but can go up to potentially 30% of a company’s turnover during the period of the contravening conduct.

This amount is per contravention. This means, if the ACCC’s allegations of misleading conduct are established, each time the supermarkets misled consumers, they would technically be liable to pay the full penalty amount.

That said, in such a case, a court would likely take a more holistic approach in setting the penalty, taking several matters into account including: the extent of the conduct, its impact on consumers, the gain to the business and whether the conduct was deliberate.

Fittingly, the ACCC is also asking the supermarkets to make a contribution to charities that provide food to people in need.

Notably, in May Qantas agreed with the ACCC to pay a penalty of $100 million, subject to court approval and in addition to compensating customers, for misleading conduct in selling tickets for flights it had already cancelled.

Authors: Jeannie Marie Paterson, Professor of Law, The University of Melbourne

Read more https://theconversation.com/woolworths-and-coles-sued-by-accc-for-allegedly-misleading-shoppers-over-the-price-of-more-than-500-products-239585

Interstate Car Transporter Urges Buyers to Book Early

As the conflict in the Middle East continues to put increasing pressure on local fuel supply, Australian transport companies are experiencing increasi...

Digital Minimalism for Business Owners: Fewer Tools, Better Systems

Be honest. How many apps are open right now? One for scheduling, another for invoices, a third for customer notes, plus a spreadsheet someone email...

The Importance Of Proactive NDIS Renewal Preparation For Sustaining Your Provider Business

Your NDIS renewal notice is not a signal to start preparing. By the time it arrives, preparation should already be well underway. For new providers, s...

Why Fire Extinguisher Testing in Sydney Is Becoming a Records Game, Not Only a Maintenance Job

A fire extinguisher used to feel like one of the simpler parts of building safety. It hung on the wall, wore a service tag, and sat there quietly unle...

The Switchboard Upgrade Question Every Melbourne Renovator Should Ask Before the Walls Close Up

Renovations have a funny way of making people think on surfaces first. Splashback, stone, joinery, tapware, paint. Fair enough too. That is the exciti...

Winter Sanitation Gaps in Parramatta Kitchens: A Hidden Pest Risk

Winter brings a host of changes to our homes, from the chill in the air to the cozy warmth indoors. However, this season also introduces sanitation ch...

When to Seek Advice from Employment Lawyers in Melbourne

Australian employment law is detailed and, at times, complex, with rights and obligations that aren't always obvious to employees or employers witho...

7 Benefits of Professional Gutter Cleaning for Australian Homeowners

Gutters aren't exactly glamorous. They sit up there on the edge of your roof, doing their job quietly - until they stop working. Clogged, overflowing ...

Pipe Floats Strengthening Pipeline Performance In Demanding Environments

Pipelines often travel through environments that are anything but predictable, water currents shift, terrain changes, and materials keep moving unde...

Why Ceiling Fans Are Essential For Comfort, Efficiency, And Modern Living

Creating a comfortable indoor environment is not just about temperature; it is about how air moves, how a room feels, and how efficiently energy is ...

Why Duct Cleaning In Melbourne Is A Smart Investment For Healthier Living Spaces

Behind your walls, ceilings, and vents lies a network quietly working every day to keep your home comfortable. Yet over time, this system can become...

Disability Service Providers Supporting Inclusive And Independent Living

Finding the right support system can feel like assembling a puzzle where every piece must fit just right. For individuals and families navigating di...

A Beginner's Guide to Owning a Caravan in Australia

Owning a caravan opens up a style of travel that's hard to match for freedom and flexibility. However, for those just starting out, the process of c...

Preparing Your Air Conditioner for Summer: What Most Homeowners Overlook

As temperatures rise, many homeowners switch on their air conditioning for the first time in months — only to find it’s not performing the way i...

What Actually Adds Value to Properties in Newcastle

Newcastle has seen steady growth over the past few years, with more buyers looking beyond Sydney for lifestyle, space, and long-term value. As dema...

What is Design and Build in Construction?

Imagine you’re about to start a new construction project, maybe it’s a custom home or a commercial building. You’ve got the idea, the land, an...

Commercial roof leak detection: why early action protects your building

Water ingress is one of the most disruptive and costly issues facing commercial properties. For property managers and facilities teams, even a minor...

Custom Photo Frames: Turning Everyday Moments into Lasting Displays

Photos capture moments, but how you display them determines how they’re experienced every day. A meaningful photograph deserves more than a generi...