Supermarket Giant Faces Federal Court Over 'Down Down' Pricing Allegations
Australia's consumer watchdog has launched a landmark Federal Court case against supermarket giant Coles, accusing the retailer of running what it describes as an "utterly misleading" pricing campaign. The case, which began hearings in Melbourne this week, centers on Coles' "Down Down" promotions that allegedly created false discounts on hundreds of everyday products.
The Alleged Pricing Strategy
The Australian Competition and Consumer Commission (ACCC) claims that between February 2022 and May 2023, Coles engaged in a systematic practice of briefly raising prices on approximately 245 staple items before reducing them and advertising the new price as a special deal. Products affected included toothpaste, soft drinks, cheese, and pet food.
According to ACCC head counsel Garry Rich SC, this strategy created "illusory" discounts that boosted sales without offering genuine price reductions to consumers. "Substantially more revenue is generated on promotion than not," Mr Rich told the court. "Material sales revenue are higher when the product is on promotion and Coles's gross profit is projected to improve when the product is sold on the 'Down Down' price."
Specific Examples Presented in Court
Mr Rich presented detailed examples to Justice Michael O'Bryan, including the pricing of 1.2kg cans of Nature's Gift Wet Dog food. The court heard that for nearly 300 days between April 2022 and February 2023, Coles sold this product for A$4.
The price then increased by 50 percent to A$6 for just seven days before being reduced to A$4.50 and promoted under the "Down Down" campaign. This meant customers were paying 13 percent more than what they had paid for all but seven of the previous 303 days.
"While that statement was literally true, it was also utterly misleading," Mr Rich argued. "It did not disclose that a reasonable consumer would not have understood that Coles had increased the price to $6 for just 7 days, immediately before the promotion."
Coles' Defense and Consumer Response
Coles has strongly denied any wrongdoing, with their representative John Sheahan KC arguing that the products in question were subject to "natural" price fluctuations and that ordinary customers understand market forces. "Grocery shoppers at Coles are much more attuned to these things than anyone around these tables are likely to be," Mr Sheahan said.
He further contended that "ordinary, reasonable consumers know they're in an inflationary environment" and understand that prices generally move upward. "In that context, what Coles is doing is perfectly natural," he asserted.
Consumer rights groups have welcomed the Federal Court action, particularly during what many describe as a cost-of-living crisis. Andy Kelly, director of campaigns and communications at consumer group Choice, told the Australian Broadcasting Corporation: "During a cost-of-living crisis, retailers should be doing all they can to ensure clear, transparent pricing – not obscuring rising prices with confusing promotions."
Kelly added that "this court case is not only a wake up call for Coles, but for other retailers who may be engaging in similar practices." The hearing is scheduled to continue for ten days as both sides present their evidence and arguments.
