ACCC Targets Woolworths Over Alleged Misleading Discounts
The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against Woolworths, Australia's largest supermarket chain, alleging that the company deliberately misled consumers through the use of fake discounts. The case commenced in the federal court in Sydney on Tuesday, nearly two months after the conclusion of hearings in a related matter.
Products such as rice crackers, Tim Tams, apple cider vinegar, pasta, and Oreos are among the everyday grocery items under examination during the two-week court proceedings. The ACCC contends that Woolworths, along with Coles, breached Australian consumer law by offering "illusory" discounts on hundreds of products through their respective promotional programs, "Down Down" and "Prices Dropped." These promotions allegedly involved misleading pricing tactics.
Woolworths' Response and Legal Defense
Woolworths, represented by Robert Yezerski, SC, is expected to robustly contest the allegations. The supermarket has stated it "fundamentally disagrees" with the ACCC's claims and maintains that it has never misled or deceived customers.
"Following COVID, there was a period of extraordinary inflation, and we were acutely aware that customers expected Woolworths to provide value wherever possible," a Woolworths spokesperson said.
"Inflation also put pressure on our suppliers’ costs, and we worked with them to reduce the inflationary impact on customers through our ‘Prices Dropped’ program."
Context of Economic Challenges
The hearings occur amid significant economic instability and heightened consumer concern regarding the cost of living, driven by renewed inflationary pressures and potential interest rate increases. Additionally, major supermarkets face supplier demands for price increases to offset sharply higher fuel and fertiliser costs, exacerbated by geopolitical tensions such as the US-Israel conflict involving Iran.
Background of the Litigation
The ACCC initiated the litigation against Coles and Woolworths in 2024 following a period marked by rapid grocery price rises and reputational damage to the supermarkets, which have been the subject of multiple parliamentary inquiries. While Justice Michael O’Brien has yet to issue a ruling in the Coles case, the ACCC is anticipated to present similar arguments against Woolworths.
The ACCC alleges that between September 2021 and May 2023, Woolworths temporarily increased prices on at least 266 products before placing them on "Prices Dropped" promotions at prices equal to or higher than those before the price increases.
Products Under Scrutiny
The ACCC and Woolworths have narrowed the focus to 12 specific products for court examination:
- Family packs of Arnott’s Tim Tams and variety packs of Tiny Teddies
- Bragg apple cider vinegar
- Carmen’s fruit and nut muesli bars
- Woolworths’ own brand penne pasta
- Fab “fresh blossoms” laundry powder
- Kleenex aloe vera tissues
- Lucky Dog bones
- Nestlé Cerelac baby rice
- Family packs of Oreos
- Sakata plain rice crackers
- Stayfree ultrathin night sanitary pads
The ACCC alleges that Woolworths had planned in many instances to subsequently place these products on "Prices Dropped" promotions following the temporary price spikes.
Coles’ Position in Related Case
In its own proceedings, Coles admitted that by the time it raised prices from the original to the spiked amount, it had already planned and agreed with suppliers on the third "Down Down" promotional price. However, Coles denied that this constituted misleading conduct, arguing that the promotional prices represented genuine discounts offered to customers after wholesale cost increases from suppliers during inflationary times.
