The ACCC went after one of Australia’s biggest supermarkets. And it won.

Justice Michael O’Bryan handed down his judgment, finding Coles ran a fake discount campaign that misled ordinary shoppers on 13 of 14 “Down Down” products examined at trial.

It’s one of the biggest consumer law victories in the regulator’s history.

The case centred on 245 household staples sold between February 2022 and May 2023. Arnott’s Shapes. Cadbury chocolates. Colgate toothpaste. Kleenex tissues. You name it.

The ACCC alleged Coles was jacking up prices for a short window, then slapping a “Down Down” discount label on products at a price that was still the same or higher than before the spike. The discounts, it said, were “illusory.” Shoppers were paying the same or more than the product’s regular price, with the spike engineered purely to manufacture a fake “Was” price.

Coles pushed back hard. It said every price increase was driven by real supplier cost pressures during the post-pandemic inflation surge. Every “Was” price was genuine. The tickets simply told shoppers the price had come down from its last undiscounted level. Nothing more.

O’Bryan sided with the ACCC.

The Pedigree dog food example tells the story.

Coles raised the price of a can from $4.50 to $5.50 in September 2022, following a supplier cost increase. Fair enough — O’Bryan found that was justified.

But just 28 days later, it put the can on “Down Down” at $4.50, with a ticket suggesting the price had fallen from $5.50. That, he found, was misleading.

The pattern across the products was the same. Coles held products at one price, hiked the price for around 28 days, then dropped to a third price that was equal to or higher than the original. Discount achieved. Shopper misled.

The magic number that emerges from the judgment: 12 weeks.

Had Coles held the higher price for 12 weeks before discounting, the “Down Down” ticket would have been fine. Four weeks was too short. Twelve would have been just right. That principle now sets a standard across the sector. And those missing eight weeks will cost the supermarket a penalty likely running into the millions.

The Nature’s Gift dog food was the one ticket to survive. Unlike the other 13 products, it carried no “Was” price on the label, meaning shoppers had no reference point to be misled by.

Former ACCC chair Allan Fels said the decision will “end fake discounts by big supermarkets,” calling it “a big win for the ACCC and a huge blow to Coles.”

Johnson Winter Slattery, led by partner James Love, acted for the ACCC. At the bar table: Garry Rich SC leading counsel, supported by Emma Bathurst, Sarida McLeod and Shawn Rajanayagam.

Allens ran Coles’ defence, led by partners Belinda Thompson and Rosannah Healy. The leading counsel were John Sheahan KC and Nicholas De Young KC, supported by Andrew Barraclough and Sahrah Hogan.

Penalties will come later. Each of the 13 contraventions carries a maximum fine of $50m, putting the theoretical ceiling at $650m. The real penalty will likely be much lower, but the ACCC has been explicit that it wants a figure that stings.

The ACCC will seek a “substantial” penalty, “reflecting the importance of accurate pricing for consumers”, said ACCC Chair Gina Cass-Gottlieb. “It is very important that a penalty is not able to be dismissed as a cost of doing business.”

A separate class action, run by Gerard Malouf and Partners on behalf of consumers who bought affected products during the period, was heard alongside the ACCC matter and is now bound by its liability findings. The damages fight, determining how much affected shoppers are owed, comes next.

Woolies is watching closely. Its own “Prices Dropped” case, built on the same alleged playbook, was heard before Justice O’Bryan in late April. Judgment is still pending.

Source: Judgment, ACCC, The Guardian, ABC, AFR