Australia’s supermarket giant Coles Group has been found to have breached consumer law after the Federal Court ruled that several of its popular “Down Down” discounts misled shoppers.
Federal Court judge Michael O’Bryan handed down the decision in Melbourne on Thursday, largely backing the case brought by the Australian Competition and Consumer Commission over Coles’ pricing practices.
The ACCC accused Coles of promoting discounts that were not actually genuine across hundreds of everyday household products sold under the retailer’s well-known “Down Down” campaign.
Court Says Most Discounts Were Not Genuine
Justice O’Bryan found that 13 out of the 14 pricing tickets examined in court were misleading because the advertised discounts did not represent real savings for customers.
The court heard that Coles had not kept products at the higher “was” price for long enough before advertising them at discounted prices.
“I have concluded that 13 of the 14 ‘Down Down’ tickets… were misleading because the relevant products were not sold at the ‘was’ price stated on the ticket for a reasonable period and as a consequence the discount represented on the tickets was not genuine,” Justice O’Bryan said.
The case centred on 245 common supermarket products sold between February 2022 and May 2023, including yoghurt, paper towels and dog food.
ACCC Claimed Price Rises Were Disguised as Discounts
According to the ACCC, Coles temporarily increased the prices of certain products before later promoting them as discounted items through the “Down Down” campaign.
The watchdog argued that customers were often paying the same price — or sometimes even more — than the products’ usual prices, making the discounts effectively meaningless.
During court hearings in February, ACCC lawyer Garry Rich described the campaign as a “planned” strategy designed to disguise price increases as discounts.
The court also heard there was fierce competition between Coles and rival supermarket chain Woolworths Group over how quickly higher prices could be introduced before products were advertised as discounted.
Internal Policies Came Under Scrutiny
Justice O’Bryan said Coles’ own internal pricing policies were an important part of the case.
The court heard that under guidelines introduced in January 2022, products were only meant to be included in “Down Down” promotions if the higher price had been in place for at least 12 weeks.
However, Coles later reduced that period to four weeks through internal policies referred to as “guardrails”.
The judge said ordinary shoppers would not see a shorter period as enough to establish a genuine previous price.
“If the ordinary consumer were told that the product had been ordinarily sold by Coles at the ‘was’ price for a period that was materially shorter than 12 weeks, the consumer would not believe that the ‘Down Down’ price was a genuine discount to the ‘was’ price,” he said.
Coles Argued Inflation Played a Role
Coles denied the discounts were fake and argued that rising supplier costs during a period of high inflation contributed to the price increases.
The supermarket giant also told the court that products were sold in substantial quantities at the higher prices before the discounts were introduced.
Despite those arguments, the court largely sided with the ACCC.
One exception involved a Nature’s Gift dog food product, where Justice O’Bryan ruled Coles had not misled shoppers because the promotional ticket did not display a previous “was” price.
Woolworths Decision Yet to Come
Justice O’Bryan is still expected to deliver a ruling in a separate but similar case involving Woolworths.
The decisions are likely to have broader implications for supermarket pricing and discount advertising practices across Australia.
Frequently Asked Questions (FAQs)
What did the Federal Court rule against Coles Group?
The Federal Court found that Coles breached Australian consumer law by misleading shoppers through several of its “Down Down” discount promotions. Judge Michael O’Bryan ruled that many of the advertised discounts were not genuine.
Why did the ACCC take Coles to court?
The ACCC alleged that Coles temporarily increased prices on certain products before later advertising them as discounted items. The watchdog argued that this created the impression of savings when customers were often paying the same price or more than the usual price.
Which products were involved in the case?
The case involved 245 everyday household products sold between February 2022 and May 2023. Items included yoghurt, paper towels and dog food sold under Coles’ “Down Down” campaign.
Did the court find all Coles discounts misleading?
No. Justice O’Bryan found that 13 out of the 14 pricing tickets examined were misleading. One exception involved a Nature’s Gift dog food product because the promotional ticket did not display a previous “was” price.
