In a significant legal showdown, Australian supermarket chain Coles is under fire from the Australian Competition and Consumer Commission (ACCC) for allegedly employing deceptive pricing strategies. The ACCC asserts that Coles misled consumers with promotional discounts that were misleadingly structured, a claim that will be examined in detail during a federal court hearing.
ACCC’s Claims of ‘Illusory’ Discounts
Beginning this week in Melbourne, the ACCC has initiated a ten-day court case aimed at scrutinising the pricing tactics used by Coles between February 2022 and May 2023. Central to the ACCC’s argument is the assertion that Coles has engaged in “illusory” discounting practices which have confused and misled shoppers.
The regulator contends that Coles inflated the prices of at least 245 items before advertising them as discounted under its “Down Down” promotion. This strategy, known as “was/is” pricing, allegedly involved increasing the regular price of products for a short period, only to reduce it slightly thereafter, thereby creating the illusion of a discount.
Concrete Examples Presented in Court
During the opening arguments, Justice Michael O’Bryan heard compelling evidence from the ACCC. Barrister Garry Rich SC highlighted a specific example involving 1.2kg cans of Nature’s Gift wet dog food. Coles maintained a price of $4 for nearly 300 days before suddenly increasing it by 50% to $6 for just one week. It was then marketed at $4.50 as part of the “Down Down” campaign, with Coles asserting that the previous price was $6.
Rich argued that while the claim of a discount to $4.50 is “literally true,” it is “utterly misleading” in the broader context. “A consumer aware of the actual circumstances would not perceive this as a genuine reduction,” he explained, illuminating the potential confusion for shoppers.
Implications for the Supermarket Sector
This case carries wider implications, not just for Coles, but for the Australian supermarket industry at large. The ACCC is also pursuing a similar case against rival supermarket Woolworths, which may bear similar ramifications depending on the outcome of this trial.
The consumer watchdog is advocating for substantial penalties against Coles, which, along with Woolworths, commands a significant share of the Australian grocery market. The scrutiny comes at a time when inflation is again on the rise, with essential goods experiencing notable price increases.
Coles’ Defence Strategy
In response to the ACCC’s allegations, Coles plans to defend its pricing practices by arguing that the adjustments were necessary to accommodate rising supplier costs. The supermarket chain maintains that it did not mislead customers intentionally, framing its pricing strategy as a response to market conditions rather than deceitful manipulation.
Rich contended in court that Coles concealed wholesale price increases by temporarily inflating retail prices, only to revert to what they deemed a “new regular price.” The case has emerged against a backdrop of renewed inflation, with the Consumer Price Index reporting a 3.8% increase in the 12 months leading to December 2025, further complicating the economic landscape.
Why it Matters
The outcome of this case will not only define Coles’ operational integrity but could also set a precedent for pricing transparency across the retail sector in Australia. As consumers increasingly scrutinise pricing strategies, the implications of this trial may reverberate throughout the industry, influencing how supermarkets communicate discounts and manage pricing in the future. The scrutiny of misleading pricing practices is crucial in protecting consumer rights and ensuring fair trade, especially in an era where inflation continually affects household budgets.
