ACCC launches legal action against Coles and Woolworths
The Australian Competition and Consumer Commission (ACCC) has launched legal action against supermarket giants Woolworths and Coles.
The ACCC alleges that they breached consumer law by misleading customers through fake discount pricing on hundreds of products.
They also alleged that both companies had sold items at regular prices for up to six months, then increased the prices of those items by at least 15 per cent before placing them in the promotion.
The ACCC alleges up to 266 products were involved in the fake discount pricing at Woolworths at different times over an estimated 20 month period, and 245 products for Coles over a 15 month period.
“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.”
Some of the Woolworths products reportedly included Tim Tams, Dolmio sauces, Doritos Salsa, Energizer batteries, Kellogg's cereals and more.
For Coles, products reportedly included Arnott’s Shapes biscuits, Band-Aids and Cadbury chocolates amongst others.
In a statement, Woolworths CEO Amanda Bardwell said they would carefully review the claims and engage with the ACCC on the matter.
"Cost-of-living pressures remain a key issue for millions of Australians who shop with us every week,” she said.
"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.
"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 said the allegations related to a period of significant cost inflation for the retailer.
“Coles’ own costs were rising, which led to an increase in the retail price of many products,” it said.
“Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers though the recommencement of promotional activity as soon as possible after the establishment of the new non-promotional prices.”
CHOICE Director of Campaigns Rosie Thomas welcomed the ACCC's announcement and call for greater transparency in supermarket pricing.
"We know … 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," she said.
The ACCC said it identified the conduct through consumer contacts and social media monitoring.
"We're seeking a significant penalty," the ACCC chair said.
"This is serious conduct that is of great concern to us, that affected many consumers with millions of products sold, subject to this practice."
Image: ABC News