Federal Court rules Coles misled shoppers with fake 'Down Down' discounts
Consensus Summary
The Federal Court ruled that Coles misled shoppers through its 'Down Down' promotion by artificially inflating prices for short periods before marketing them as discounts. Judge Michael O'Bryan found that 13 of 14 sample products were deceptively promoted, as the 'was' price was not maintained for a reasonable 12-week period, making the discounts illusory. The ACCC alleged Coles temporarily increased prices on 245 products between February 2022 and May 2023, often at higher levels than before the spike, misleading over 10 million customers. Coles defended its actions, arguing price hikes were due to supplier cost increases during inflation, but the court concluded the promotional tactics were misleading. The ruling could lead to fines exceeding $100 million, with estimates suggesting hundreds of millions, and a class action lawsuit seeking compensation for affected shoppers. Coles' shares dropped 2.4% following the decision, and the case sets a precedent for similar proceedings against Woolworths, with broader implications for retail pricing practices across Australia.
✓ Verified by 2+ sources
Key details reported by multiple sources:
- Federal Court Judge Michael O'Bryan ruled that 13 of 14 sample products in Coles' 'Down Down' promotion were misleading because the 'was' price was not maintained for a reasonable period (12 weeks).
- The ACCC sued Coles over 245 products under the 'Down Down' promotion between February 2022 and May 2023, alleging misleading discounts.
- Coles temporarily increased prices for products (median of 28 days) before placing them on 'Down Down' promotions, often at prices higher than before the spike.
- Justice O'Bryan found that Coles' price increases were commercially justifiable due to supplier cost increases but were misleadingly marketed as discounts.
- The ACCC alleges Coles' tactics misled over 10 million shoppers, and a class action lawsuit represents these customers for compensation.
- Coles' shares fell 2.4% following the ruling, with a $630 million drop in market value.
- The ACCC will seek a substantial penalty against Coles, with estimates suggesting fines could exceed $100 million or even hundreds of millions.
- Justice O'Bryan is also presiding over a similar case against Woolworths, with a ruling pending.
- Coles internally reduced the 'was' price period from 12 weeks to 4 weeks in 2022, accelerating the 'Down Down' promotions.
- The case focused on products like baby formula, yoghurt, deodorant, Coca-Cola, toothpaste, butter, and Arnott’s Shapes.
Points of Difference
Details reported by only one source:
- The baby formula example showed a price of $18 for 794 days, then a $6 increase to $24 before being marketed as a 'Down Down' discount at $24 (with a 'was' price of $24).
- The yoghurt was $6 for 461 days, then increased before being placed on 'Down Down' at 70 cents more than the original price.
- The $5 deodorant rose to $6.50 before being dropped to a 'Down Down' price of $6.
- The 2-litre Coke example showed a price rise from $2.75 to $3.50, with the 'Down Down' price 27% higher than the original.
- The case centered on price fluctuations of 245 products between February 2022 and May 2023.
- Assistant Minister for Competition Andrew Leigh called the decision 'an important win for shoppers'.
- Former ACCC chair Allan Fels predicted penalties could exceed $100 million, with hundreds of millions needed as a deterrent.
- The ruling exposed a 'race to the bottom' in compliance due to competitive pressure from Woolworths.
- The podcast mentioned Coles' reputation was 'shot to pieces' in recent years, with supermarkets accused of prioritizing profits over customers during inflation.
- The 'Down Down' campaign relies on 'was/is' comparative pricing, which the ACCC argues is prone to abuse.
- Shopper Deb Barnes said, 'They just seem to have gotten away with ripping people off.'
- Shopper Sally Walker remarked, 'If you’re going to get ripped off here, you’re going to get ripped off everywhere you go.'
- Justice O'Bryan questioned whether consumers were actually harmed by the conduct, noting that if Coles had maintained the 'was' price for 12 weeks, the discounts would not have been misleading.
Where the reporting differs
Details that conflict, or appear in only some outlets:
- The Guardian and SMH suggest Justice O'Bryan questioned whether consumers were harmed, while ABC and THEAGE emphasize the misleading nature of the discounts without this nuance.
- ABC and THEAGE state Coles' price increases were due to supplier cost increases, but THEAGE and GUARDIAN also note Coles shortened the 'was' price period to compete with Woolworths, implying strategic manipulation.
Source Articles
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