Regulator Sues Supermarket Giants for ‘Illusory’ Discounts on 500 Products

Woolworths and Coles Supermarket signage in Melbourne, Australia, on Feb. 21, 2024. AAP Image/Joel Carrett

The Australian Competition and Consumer Commission (ACCC) has taken Australia’s two biggest supermarkets to court for misleading consumers.

Woolworths Group Limited and Coles Supermarkets are accused of breaching Australian Consumer Law by making misleading “discount pricing” claims on hundreds of common supermarket products.

According to the ACCC, select products saw price increases of at least 15 percent over some time, before being included in Woolworths’ “Prices Dropped”’ promotion and Coles’ “Down Down” promotion.

These new prices did not result in significant savings for customers.

The ACCC is seeking penalties, costs, and other legal changes against Woolworths and Coles. It also wants both supermarkets to fund a charity delivering meals to Australians in need, on top of their existing meal donation programmes.

What Did the ACCC Have to Say

ACCC Chair Gina Cass-Gottlieb said the marketing campaigns run by the supermarkets led consumers to believe that the “Prices Dropped” and “Down Down” promotions reflected sustained reductions in regular prices.

“However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price,” said Cass-Gottlieb.

“We allege that Woolworths and Coles breached Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory,” Cass-Gottlieb added.

The ACCC further alleges that, in many cases, both supermarkets had already planned to place the products on promotion before the price spike.

The regulator identified 266 Woolworths products across 20 months, and 245 Coles products over 15 months, via consumer complaints and social media monitoring.

According to the ACCC’s estimates, Woolworths and Coles sold tens of millions of these affected products, generating significant revenue from the sales.

Woolworths, Coles Response

Both Woolworths and Coles issued a statement on the ACCC proceedings saying they will carefully review the claims made by the ACCC.

“We will 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, and we remain committed to offering many ways for customers to save at the checkout,” said the statement issued by Woolworths.

Meanwhile, Coles said it took compliance with Australian Consumer Law seriously and emphasised building trust with all stakeholders, especially customers.

Simultaneously with the ACCC’s court action against Coles and Woolworths, the government has released a draft for a new mandatory Food and Grocery Code, which will apply to major supermarkets and impose multi-million-dollar fines for non-compliance.

Key changes include making the code mandatory, strengthening dispute-resolution mechanisms, addressing supplier concerns around fairness, and introducing penalties for code breaches.

Woolworths Products Under Scrutiny

Woolworths is alleged to have misled consumers about the prices of 266 products between September 2021 and May 2023.

Affected products include: Arnott’s Tim Tams biscuits, Dolmio sauces, Doritos salsa, Energizer batteries, Friskies cat food, Kellogg’s cereal, President butter, Listerine mouthwash, Moccona coffee capsules, Mother energy drinks, Mr Chen’s noodles, Nicorette patches, Ocean Blue smoked salmon, Oreo cookies, Palmolive dishwashing liquid, Raid insect spray, Sprite soft drink, Stayfree pads, Twisties, Uncle Tobys muesli bars, and Vicks VapoDrops.

Coles Products Facing Scrutiny

The ACCC alleges Coles misled consumers about the prices of 245 products between February 2022 and May 2023.

Affected products include Arnott’s Shapes biscuits, Band-Aids, Bega cheese, Cadbury chocolates, Coca Cola soft drink, Colgate toothpaste, Danone yoghurt, Dettol multi-purpose wipes, Fab laundry liquid, Karicare formula, Kellogg’s snack bars, Kleenex tissues, Libra tampons, Lurpak butter, Maggi two-minute noodles, Nature’s Gift dog food, Nescafe instant coffee, Palmolive shampoo, Rexona deodorant, Sakata rice crackers, Sanitarium Weet-Bix cereal, Strepsils lozenges, Sunrice rice, Tena pads, Viva paper towels, Whiskas cat food, and Zafarelli pasta.