A person walks outside a Coles supermarket in Melbourne, Australia, on September 23. Australia’s consumer watchdog has launched legal action against Woolworths and Coles for allegedly misleading buyers with fake discounts. Photo by Con Chronis/EPA-EFE
Sept. 23 (UPI) — Australia’s consumer watchdog sued the Oceania country’s two largest supermarkets on Monday, accusing Coles and Woolworths of misleading customers by misrepresenting hundreds of products as being discounted.
The Australian Competition and Consumer Commission filed separate lawsuits against the two supermarkets, centering on each of their discounted items programs — Woolworths’ “Prices Dropped” and Coles’ “Down Down.”
The lawsuits allege that both companies hiking prices on hundreds of products for a short period of time before they were slightly discounted to be placed on their reduced-prices promotions. Despite being advertised as discounted, the products were as expensive, if not more so, than their original prices before the price hike.
The lawsuits allege that the subject products had been sold at a regular price for at least 180 days before their prices were increased by a minimum of 15% for a short period of time. They were then marked down and placed on Woolworths’ “Prices Dropped” promotion and Coles’ “Down Down” promotion.
The ACCC accuses both companies of misleading their consumers in breach of Australian Consumer Law. Woolworths allegedly employed the practice with 266 products between September 2021 and May 2023 and Coles with 245 products between February 2022 and May 2023.
Products the ACCC says were part of the scheme range from batteries to Coca-Cola, baby formula to pet food and toothpaste.
As an example, the lawsuit involving Woolworths states from Jan. 1, 2021, until Nov. 27, 2021, the grocer offered the Oreo Family Pack at a regular price of about $2.38. On Nov. 28, the price jumped to $3.39 where it stayed for 22 days before dropping back to $3.06 and advertised as discounted on its Prices Dropped promotion, despite being 29% more expensive than its regular price of $2.38.
The watchdog estimates that both Woolworths and Coles sold tens of millions of products through this scheme, generating significant revenue.
“Many consumers rely on discounts to help their grocery budgets stretch further, particularly during this time of cost-of-living pressures. It is critical that Australian consumers are able to rely on the accuracy of pricing and discount claim,” ACCC Chair Gina Cass-Gottlieb said in a statement.
“We allege these misleading claims about illusory discounts diminished the ability of consumers to make informed choices about what products to buy and where.”
Woolworth Group told UPI in an emailed statement that they will “carefully review the claims made by the ACCC and will continue to engage” with the watchdog on the litigation.
Amanda Bardwell, chief executive officer of Woolworths Group, defended its Prices Dropped program, saying it was introduced to provide customers with “great value on their favorite products.”
“We remain committed to offering many ways for customers to save at the checkout,” Bardwell said.
Coles in an emailed statement to UPI defended against the allegations by saying the lawsuit centers on a time when it received “a large number of cost price increases” from suppliers as its own costs were rising.
“Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers through the recommencement of promotional activity as soon as possible after the establishment of the new non-promotional price,” it said.
The ACCC is seeking declarations, penalties and costs and community service orders from the court, requiring both companies to fund a registered charity to deliver meals to Australians in need.
With about 1,140 supermarket stores, Woolworths is Australia’s largest supermarket chain. Coles, at more than 840 national locations, is ranked second.