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(Bloomberg) — Coles Group Ltd. and Woolworths Group Ltd., Australia’s two biggest supermarket chains, have been sued by the country’s competition regulator over claims they misled shoppers over discounting claims on hundreds of common products. 

The Australian Competition & Consumer Commission claims the retailers sold products at regular long-term prices for at least six months before increasing them by at least 15% for a brief period. The products were then placed in Woolworths’ ‘Prices Dropped’ promotion and Coles’ ‘Down Down’ discounts at prices lower than during the price spike but higher than, or the same as, the regular price that applied before the spike, the ACCC said in a statement Monday.

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“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products,” ACCC Chair Gina Cass-Gottlieb said in the statement. “However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price.”

Australia has one of the world’s most concentrated supermarket sectors, with Woolworths and Coles controlling just over half of the market, according to Bloomberg Intelligence. Both chains have come under political fire during cost-of-living pressures sparked by stubbornly high inflation. 

29% Higher

The latest inflation data for the quarter ended June showed the most significant contributors to prices were housing and food, including non-alcoholic beverages.The rise in food and non-alcoholic beverage prices was driven by fruit and vegetables, meals out and take away food, and meat and seafood, data from the Australia Bureau of Statistics showed.

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The competition regulator alleges Woolworths made false or misleading representations about the prices of 266 products — including Tim Tams biscuits, Mother energy drinks and Palmolive dishwashing liquid — between September 2021 and May 2023.

In one example cited, from at least Jan. 1, 2021 until Nov. 27, 2022, Woolworths offered Oreo Family Pack Original cookies for for a regular price of A$3.50 ($2.38) for at least 696 days.

On Nov. 28, 2022, the price was increased to A$5.00 for 22 days. On Dec. 20, 2022, the cookies were placed on a ‘Prices Dropped’ promotion at a new price of A$4.50 and a ‘was’ price of A$5.00. 

The ‘Prices Dropped’ price of A$4.50 was in fact 29% higher than the previous regular price, the regulator said.

—With assistance from Swati Pandey.

(Adds regulator comment from third paragraph.)

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