The ACCC is taking Woolworths and Coles to the Federal Court, accusing them of inflating prices before claiming discounts. This legal case highlights important lessons for all businesses selling products, especially on how to avoid misleading consumers under Australian Consumer Law. Let’s check-out (gettit?) the key points.
What’s in the Basket of Allegations?
The ACCC claims that both supermarket giants bumped up prices then subsequently advertised them as “Prices Dropped” or “Down Down” deals. Woolworths allegedly did this for 266 products over 20 months, while Coles followed suit on 245 products over 15 months. Everyday items, from biscuits to shampoo, were caught in the price hike.
The problem? The so-called “discounted” prices were often the same or even higher than before. This left consumers feeling like they were getting a bargain when, in reality, they weren’t saving a cent. The meant that “The discounts were, in fact, illusory,” as alleged by ACCC chair Gina Cass-Gottlieb in a statement.
As an example, the ACCC says Woolworths sold Oreo family packs for $3.50 for nearly two years. Then, on 28 November 2022, the price jumped to $5 for a total of 22 days. By 20 December, Woolworths put the Oreos on a “price dropped” promotion at $4.50—29% higher than the original price. The “was” price? Still $5. Looks like Woolworths tried to milk that Oreo deal a bit too much!
Lesson 1: Don’t Sugarcoat the Price
If you’re offering a discount, make sure it’s real. Inflating prices before slapping on a sale sticker is a recipe for legal trouble. Australian Consumer Law is clear: businesses must be honest about price drops. Anything less, and you’re misleading your customers.
Lesson 2: Illusory Discounts? Not a Good Look
Promising discounts that don’t exist is a fast track to court. The ACCC is on the hunt for any dodgy deals. Pretending prices are slashed when they’re not could cost you big time. Just like Woolworths and Coles, you’ll find that fake deals won’t pass the checkout.
Lesson 3: Penalties Could Be a Heavy Load
The fines for misleading conduct aren’t small change. Under current law, businesses can face penalties of up to $50 million, or three times the benefit gained from the breach, or 30% of turnover. The ACCC is seeking fines, costs, and even community service orders to fund charity programs.
Building Trust or Losing It at the Checkout?
Woolworths and Coles have spent years teaching consumers to trust their “Prices Dropped” and “Down Down” promotions. Now, the ACCC says they’ve been stacking the shelves with false discounts. For any business, misleading your customers comes with high stakes. It’s not just about legal penalties—it’s about losing the trust that brings shoppers back.
Stay on the Right Shelf
To avoid the price war with regulators, businesses need to:
- Be Honest About Discounts: Show the real price difference and don’t inflate figures.
- Keep Records: Track your pricing so you can prove that any discount is genuine.
- Consult a Lawyer: Getting expert advice from a consumer lawyer can help you stay compliant with the law.
The Big Picture
The ACCC’s case against Woolworths and Coles fits into a larger inquiry into supermarket pricing and how costs are passed from supplier to consumer. With cost-of-living pressures rising, shoppers rely more on discounts. Businesses should be careful not to stretch the truth.
Final Checkout
The ACCC’s legal action serves as a stark reminder: play fair with your pricing. Whether you’re running a local shop or a major chain, fake discounts will only lead to trouble. Keep your prices transparent, your deals real, and if in doubt, consult an experienced consumer lawyer, like the legends at Magnolia Legal.
After all, honesty in pricing is the best way to stay out of the legal aisle of shame.