Coles has been ordered by the Federal Court to pay fines for misleading customers by using price increases that lasted a relatively short time as discounts under the Down Down promotion, an action that could end up costing the retail giant more than $100 million.
Justice Michael O’Bryan delivered the verdict in Melbourne yesterday, stating that 13 out of 14 randomly chosen products examined during the trial were sold at inflated prices, thereby making the “was” price mentioned in the promotional ticket misleading.
The proceedings were initiated in September 2024 by the Australian Competition and Consumer Commission against the grocery giant over 245 products offered between February 2022 and May 2023.
Justice O’Bryan added that the selected products were not sold at the “was” price mentioned on the promotional ticket for an adequate period of time, meaning the discount indicated was not genuine.
The court accepted that suppliers did face legitimate cost pressures on Coles and that the underlying price increases could be commercially justifiable.
The evidence was that the affected lines had sat at a stable shelf price for a median of roughly a year before being lifted for a median of only 28 days, then cut back to a level the same or higher than the original price and tagged as a Down Down deal.
Justice O’Bryan said if the higher “was” price had stayed for 12 weeks or more, the tickets would not have been misleading and would have given the industry a clearer benchmark for promotional pricing.
Also Read: Chalmers takes shot at Hanson as investors warn renters will pay for negative gearing changes
The products in the case were everyday staples like Arnott’s Shapes, Coca Cola, Cadbury chocolates, Colgate toothpaste, Weet Bix and Nature’s Gift dog food.
In one example put forward during the trial, Shapes went from $5 to $6.50 before being priced at $5.50 on a Down Down ticket.
Penalties to be decided later
Earlier this year, at a hearing, the barrister representing the ACCC, Mr Garry Rich SC, stated plainly: “Why on earth are you telling your customers that your prices are coming down? They are not.”
However, Coles’ barrister, Mr John Sheahan, contended that regular shoppers were aware that prices tend to go up with the rate of inflation and that the company had been offering real reductions.
The fine penalties will be determined during another round of hearings.
The Australian chain, owning more than 840 retail outlets across the country, is worth around $28 billion in market value and could be fined hundreds of millions of dollars.
The ACCC has indicated that it would seek an order compelling the company to carry out community service work, namely contributing to charities working with disadvantaged members of the Australian population.
It is conducting a similar case against Woolworths concerning its ‘Prices Dropped’ program in the Sydney Court.
The Down Down campaign launched by Coles back in 2010 has become one of the most recognizable marketing programs.
