A Federal Court judge has ruled that supermarket giant Coles broke consumer law by misleading shoppers with fake discount prices. The decision follows a legal challenge by the Australian Competition and Consumer Commission (ACCC) regarding the retailer’s prominent “Down Down” promotional campaign.
Justice Michael O’Bryan found that in 13 of the 14 pricing tickets submitted to the court, the discounts offered were not genuine. The judge concluded that these tickets would have misled an ordinary consumer because the products were not sold at the stated “was” price for a reasonable period.
The ‘Down Down’ Deception
The ACCC’s case focused on 245 common household items, including yoghurt, dog food, and paper towels, priced under the “Down Down” promotion between February 2022 and May 2023. The watchdog alleged that Coles misled customers by increasing the price of items for a short window before applying a discount.
Justice O’Bryan noted that Coles’ own internal policies in January 2022 required a product to be sold at a price for 12 weeks before it could be featured in a “Down Down” promotion. The court found that any period shorter than 12 weeks would not be considered reasonable by shoppers.
Evidence presented in court revealed a “race to the bottom” between Coles and its rival, Woolworths, regarding the shortest possible time to establish a higher price before discounting. Coles had shortened its establishment period to four weeks under internal policies known as “guardrails.”
Coles’ Defense and Legal Fallout
Coles defended its practices, rejecting the claim that discounts were fake. A spokesperson stated that price increases were commercially justifiable as they resulted from supplier cost increases during a period of high inflation.
Despite this defense, ACCC Chair Gina Cass-Gottlieb stated the case was brought in the public interest to help customers identify genuine value for money. Former chairman Allan Fels described the ruling as a “huge blow to Coles,” suggesting the company may face substantial fines and reputational loss.
The ruling has also triggered a class action lawsuit. Gerard Malouf, chairperson of GMP Law, stated the judgment is a vindication for Australians and that the lawsuit may result in refunds for group members who purchased the affected products.
Future Implications and Pending Rulings
The legal consequences for Coles are not yet finalized, as Justice O’Bryan will make orders regarding penalties at a later date. The consumer group CHOICE has called for the federal government to consider further reforms to ensure pricing remains transparent.
The industry is now awaiting a separate decision. Justice O’Bryan is also presiding over a similar case against Woolworths, with that judgment reserved for a later date. Allan Fels suggested that the outcome for Woolworths is likely to be similarly unfavorable.
One exception was noted in the Coles ruling: the court found the company did not mislead shoppers regarding Nature’s Gift dog food, as the “Down Down” ticket for that specific product did not include a previous “was” price.
Frequently Asked Questions
What was the primary issue with the “Down Down” promotions?
The court found that Coles misled shoppers by promoting discounts that were not genuine, as products were not sold at the higher “was” price for a reasonable period (at least 12 weeks) before being discounted.
Which products were involved in the ACCC case?
The case involved 245 common household items, with specific examples including yoghurt, paper towels, and dog food.
What happens next for Coles and Woolworths?
Justice O’Bryan will determine penalties for Coles at a later date. He is also expected to rule on a similar case involving Woolworths later this year.
Do you think stricter government regulations are needed to ensure supermarket discounts are genuine?
