AUSTRALIA’S competition and consumer watchdog has today announced it is taking legal action against Coles and Woolworths – alleging they mislead consumers with their respective “down down” and “prices dropped” ranges.

The Australian Competition and Consumer Commission alleges that both supermarkets held products at the same price for long periods, before increasing them by at least 15pc for brief periods, then dropping the prices slightly and putting them into the special promotions. The ACCC says they often dropped them to prices that were above the long-term prices.

No fresh red meat products have been named in the examples used in the ACCC’s media releases on the lawsuit. However both the “Prices Dropped” and “Down, Down” ranges include fresh red meat products – if only less popular lines rather than mainstream staples like mince and steak. A quick look at both ranges found they both had a thin-cut knuckle/topside steak they called sizzle steak and Coles had beef barbecue sausages.

Woolworths is alleged to have done this with 266 products during the period between September 2021 and May 2023 and Coles with 245 products between February 2022 and May 2023.

“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products,” ACCC chair Gina Cass-Gottlieb said.

“However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price.

“We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory. We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price.”

Woolworths to review the claims

In response, Woolworths said it was going to review the claims and work with the ACCC on the matter. Woolworths Group CEO, Amanda Bardwell, said: “Cost-of-living pressures remain a key issue for millions of Australians who shop with us every week.

“Our customers are telling us they want us to work even harder to deliver meaningful value to them and it’s important they can trust the value they see when shopping our stores,” Ms Bardwell said.

“Our Prices Dropped program was introduced to provide our customers with  great everyday value on their favourite products.

“We remain committed to offering many ways for customers to save at the checkout, including thousands of weekly specials, everyday low prices on household essentials, a great value own brand range and through our Everyday Rewards program.”

Coles to defend allegations

In an announcement to the ASX today, Coles said it intends to defend the proceedings.

“The allegations relate to a period of significant cost inflation when Coles was receiving a large number of cost price increases from our suppliers and, in addition Coles’ own costs were rising, which led to an increase in the retail price of many products,” the statement said.

“Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers through the recommencement of promotional activity as soon as possible after the establishment of the new non-promotional price.

“In line with our values, Coles takes compliance with the Australian Consumer Law extremely seriously, and places great emphasis on building trust with all stakeholders, especially our customers.”

Choice welcomes lawsuit

Consumer group Choice has been raising concerns about supermarket pricing in recent years, with surveys comparing prices and complaints to the ACCC.

Director of campaigns Rosie Thomas said:

“We know from our extensive work in this area that promotional labels at the major supermarkets often confuse shoppers, and the frequent changes in prices make it difficult to tell whether there is a genuine discount or not.

“Earlier this year, our nationally representative research revealed that on average 1 in 4 people found it difficult to identify if certain supermarket labels represented a true discount or not. ‘Down Down’ labels at Coles and ‘Prices Dropped’ labels at Woolworths were among those that caused confusion for consumers.

“This kind of bad behaviour from the supermarkets is exactly why we gave Coles and Woolworths a Shonky in 2023, and it urgently needs to be addressed – particularly during a cost-of-living crisis when people are doing it tough.

“We’re calling for greater transparency of historical supermarket pricing data, as easier access to data on supermarket price changes over time would have made it much harder for the supermarkets to get away with this kind of behaviour for so long.”