THE Australian Competition and Consumer Commission is tackling both major national supermarket retailers, Coles and Woolworths, via the Federal Court over alleged misleading discount claims.

The first of the separate actions, against Coles, started in the Federal Court in Melbourne this morning, with the ACCC accusing the retailer of “utterly misleading” discounts surrounding the company’s ‘Down, Down’ campaigns. The hearing is expected to last for ten days.

In a separate Federal Court action to be heard later, ACCC will make similar claims over Woolworths’ “Prices Dropped” promotions.

The ACCC said it was not making any allegations about collusion or anti-competitive conduct by Woolworths and Coles as part of these proceedings.

“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products,” the ACCC said when the charges were first laid in 2024.

The ‘Down, down’ and ‘Prices dropped’ discount campaigns have covered a wide range of grocery, dry goods and perishables including red meat. The ACCC alleges the conduct involved 266 products for Woolworths across 20 months, and 245 products for Coles at different times across 15 months.

In its opening remarks this morning the ACCC claimed Coles promoted “illusory” discounts as part of its highly promoted and long-running ‘Down, down, prices are down’ campaign.

The ACCC will argue the supermarket knowingly increased the prices of common household goods it later intended to include in the promotion. The proceedings are already being described by some metropolitan media as the “case of the century”, and is the culmination of months of political pressure applied to the supermarket giants over their perceived duopoly.

The ACCC’s complaint covers alleged misleading practice between February 2022 and May 2023.

The actions represented breaches of consumer law, which say that businesses must not make false or misleading statements about prices, ACCC’s legal team claimed.

The ‘Down Down’ program was introduced by Coles in 2010 and marketed as a promotional campaign designed to reduce the regular shelf price of commonly purchased products.

Coles has vigorously rejected the ACCC’s claims, arguing the price rises were justified due to inflation hammering suppliers and a surge in global commodity prices, as well as in packaging, freight, utilities, and international shipping.

The company said it intends to defend the proceedings and has previously argued price movements were driven by supplier cost increases rather than an attempt to mislead customers. It has argued its promotions aim to balance cost pressures with value for shoppers.

In its initial claim launched in 2024, the ACCC’s allegations relate to products sold by Woolworths and Coles at regular long-term prices which remained the same – excluding short-term specials – for at least six months and in many cases for at least a year.

The products were then subject to price rises of at least 15 percent for brief periods, before being placed in Woolworths’ ‘Prices Dropped’ promotion and Coles’ ‘Down Down’ promotion, at prices lower than during the price spike, but higher than, or the same as, the regular price that applied before the price spike.

“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products,” ACCC chair Gina Cass-Gottlieb said.

“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,”

“We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price,” Ms Cass-Gottlieb said.

The ACCC identified the conduct through consumer contacts to the ACCC and social media monitoring, and then conducted an in-depth investigation using its compulsory powers.

“We allege these misleading claims about illusory discounts diminished the ability of consumers to make informed choices about what products to buy, and where,” Ms Cass-Gottlieb said.

The ACCC estimates that Woolworths and Coles sold tens of millions of the affected products and derived significant revenue from those sales.

The ACCC is seeking declarations, penalties, costs and other orders. It is also seeking community service orders that Woolworths and Coles must each fund a registered charity to deliver meals to Australians in need, in addition to their pre-existing charitable meal delivery programs.

The maximum penalty for each breach of the Australian Consumer Law increased in 2022, part way through the period of the alleged conduct. For contraventions from 10 November 2022, the maximum penalty is up to $50 million if the Court can determine the value of the ‘reasonably attributable’ benefit obtained, three times that value, or if the Court cannot determine the value of the ‘reasonably attributable’ benefit, 30pc of the corporation’s adjusted turnover during the breach turnover period for the contravention.

Pricing movement of Oreos Family Pack Original cookies from January 2021 to May 2023.

In this example provided as evidence by ACCC, it says from at least 1 January 2021 until 27 November 2022, Woolworths offered the Oreo Family Pack Original 370g product for sale at a regular price of $3.50 on a pre-existing ‘Prices Dropped’ promotion for at least 696 days.

On 28 November 2022, the price was increased to $5.00 for a period of 22 days. On 20 December 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 per cent higher than the product’s previous regular price of $3.50.