Source : Perth Now news
Coles supermarkets’ “Down Down” pricing campaign is set to fall under the microscope as the competition watchdog alleges shoppers were misled about price changes.
The Australian Competition and Consumer Commission (ACCC) has brought legal action against Coles, claiming the company made false or misleading representations to customers in the supermarket aisle.
Focused on a 15-month window between February 2022 and May 2023, the ACCC alleges Coles artificially spiked the prices of 245 products before placing them on the “Down Down” promotion at a price equal to, or higher than, what it was originally.
The legal case began in the Federal Court in Melbourne on Monday as barrister Garry Rich SC, for the ACCC, took Justice Michael O’Bryan to a single example.
He told the court for 296 days the price of 1.2kg of Nature’s Gift wet dog food was sold at Coles for $4 before it jumped 50 per cent on February 7, 2023.
Eight days later Coles advertised the price had dropped to $4.50, with a ticket explaining the price had gone Down Down from $6.
“That statement was literally true, the price had been $6,” Mr Rich said.
“That statement was also utterly misleading; it did not disclose, and a reasonable consumer would not have understood, that Coles had increased the price to $6 for just seven days.”
Mr Rich said, in the ACCC’s case, Coles had misled customers into believing the $4.50 ticket price was a genuine reduction from the “regular price of the product”.
He told the court it was accepted this occurred during a period of high inflation when wholesale costs had risen and that Coles was “perfectly entitled” to raise prices.
But the issue, he alleged, was that reasonable consumers would have been misled into believing they were being given a price reduction.
“In circumstances where a product is being sold for $4 for almost a year, the price is $6 for just a week, it’s not fair dinkum to tell the customer the price has gone down,” he argued.
Mr Rich said the evidence called during the trial would allegedly show Coles never intended to charge the full price for these products “beyond the spike” and this pattern had been established because the supermarket chose to raise prices.
“Coles was desperately, knowingly, increasing the retail price of these products to account for increases in the wholesale costs,” Mr Rich alleged.
“All of the evidence Your Honour is going to hear about how there were good reasons for increasing prices begs the question, ‘Why on Earth are you telling your customers that your prices are going down?’”
The court was told 12 items, including toothpaste, soft drink, Arnott’s Shapes, Band-Aids and shampoo had been chosen as “sample products” to be assessed for the case.
The majority of these products’ prices rose for a median period of 28 days before a Down Down promotional reduction was advertised in stores.
In another example raised by Mr Rich, the price of Rexona antiperspirant sat at $5 for 409 days before jumping to $6.50 for 30 days and then falling to $6 – a 20 per cent increase on the first price.
“There is a similar conduct with respect to all the sample promotions,” Mr Rich said.
“There is never a scenario in which price two is going to continue.”
Justice O’Bryan at one point questioned whether a product’s initial price was relevant, if the wholesale costs had changed, and said he struggled to believe whether customers were “so naive” to believe prices had no relationship with the wholesale cost.
The Down Down promotion, the court was told, was Coles’ signature price discounting marketing strategy after it was introduced in June 2010, with TV advertisements promising to reduce the cost of a shopper’s basket.
Barrister John Sheehan KC, for Coles Supermarkets, has yet to respond to the ACCC’s case and is expected to do so on Tuesday.
In a concise statement in response, filed to the court by Coles, the supermarket argues the proceeding relates to a period of time when Coles and its suppliers were “experiencing significant cost increases”.
They argue the non-promotional price, before the Down Down discounts were applied, was the genuine, undiscounted shelf price.
Coles denies that the promotional tags appearing on shelves made representations to customers about a reduction on any “previous regular price”.
The ACCC has a similar lawsuit against Woolworths for its “Prices Dropped” promotional campaign, which has not yet been heard.
The court case is expected to run for 10 days.
