Coles is in the dock, and the ACCC might soon be there too.

The ACCC is in the middle of its blockbuster fight in the Federal Court, alleging the supermarket's "Down Down" promotions were fake discounts that misled millions.

It's one of the biggest cases ever brought by the competition regulator.

The 10-day hearing is before Justice Michael O'Bryan.

At the heart of the dispute: how long Coles should wait before slapping a "discount" label on a product after hiking its price.

In many cases, the regulator contends, Coles had already planned the "Down Down" promotion before hiking the price, deliberately engineering the spike to "establish" a higher "was" price.

The ACCC says a separate contravention occurred each time a consumer viewed a "Down Down" ticket for an affected product. That number could run into the millions.

The ACCC's barrister Garry Rich SC walked Justice O'Bryan through the pattern. A 1.2kg bag of dog food sold for $4 for 296 days. The price jumped 50% to $6 for seven days.

"On the eighth day, Coles began offering that product for sale at a price of $4.50, being 13 per cent more than its customers had been paying for all but seven of the previous 303 days," Rich told the court.

Rich called the "Down Down" label "literally true" but "utterly misleading".

The ACCC even points to an email from Coles' Head of Pricing and Value, who raised concerns that moving products onto "Down Down" after weeks of increased pricing “is not in the spirit of what DD is”.

"Any reasonable consumer who knew the facts would conclude that Coles was tricking them", the ACCC bluntly puts in its submissions.

John Sheahan KC, appearing for Coles, pushed back hard.

In its submissions, Coles attacked the ACCC's case as built on an "artificial construct" that no reasonable shopper in a supermarket aisle would actually think through.

Coles' central argument is that the "Down Down" tickets simply conveyed that a product's price had been reduced from its previous non-promotional "white ticket" price. The tickets didn't carry any implicit message about how long that previous price had been in place.

Sheahan told the court the ordinary consumer walking down the aisle would only care about one thing:

"So long as the 'was' price is a genuine price, not contrived or ephemeral, then the consumer's interest is appropriately satisfied," he said.

On the specific products, Coles says every "was" price was genuine, and it was "simply responding to the competition", not engineering a sham.

Sheahan told the court the price increases were driven by supplier cost pressures during "dramatic" inflation.

"To say prices are going down plainly means the price is lower than it would have been but for this promotion," he added. "In the end all prices are temporary - nothing lasts forever."

Coles' closing statement was blunt: the ACCC "started with its case on falsity and sought to formulate a representation to fit that case".

The application, it says, should be dismissed.

Woolworths is watching closely, with a parallel legal battle set for April and May.

This isn’t the only head-to-head fight between the supermarket giant and Australia’s competition regulator.

Coles is separately gearing up for a second scrap with the regulator over a proposed supermarket lease in Kalgoorlie, WA.

The ACCC pushed the deal into an in-depth Phase 2 review, saying the new store could "substantially lessen competition" for groceries in the local market and entrench Coles' market power.

Coles is challenging the call, setting up a potential test case for the ACCC's new merger powers. Since 1 January 2026, all supermarket acquisitions by Coles and Woolworths require ACCC approval before they can proceed.

Woolies is no doubt eyeing that match closely as well.

Source: Federal Court, AFR, The Australian, The Guardian