Coles Defends Pricing Strategy in Federal Court Amid ACCC Allegations
The Australian Competition and Consumer Commission (ACCC) has launched a high-profile federal court case against supermarket giant Coles, accusing it of offering "utterly misleading" discounts through its "Down Down" promotion. The hearing, which began on Monday in Melbourne, is set to last 10 days and will scrutinise Coles' pricing practices between February 2022 and May 2023.
Allegations of 'Illusory' Discounts
According to the ACCC, Coles breached consumer law by implementing a strategy known as "was/is" comparative pricing. The regulator alleges that Coles sold products at a regular price for at least six months, then temporarily inflated the prices before slightly reducing them as part of the "Down Down" promotion. Barrister Garry Rich SC, representing the ACCC, argued in court that these promoted prices were often higher or the same as the previous regular prices, making the discounts "illusory."
Rich provided a specific example involving Nature's Gift wet dog food. He stated that Coles sold 1.2kg cans for $4 over 296 days between April 2022 and February 2023. The supermarket then increased the price by 50% to $6 for just seven days, before lowering it to $4.50 and marketing it as a discount from $6. While technically true, Rich described this as "utterly misleading," as consumers would not perceive it as a genuine reduction.
Coles' Defence and Broader Implications
Coles plans to defend the allegations by arguing that the pricing changes were a direct response to increased costs from suppliers. However, the ACCC contends that Coles disguised wholesale price increases as discounts by spiking retail prices higher than necessary and then reducing them to a new regular price. This case is expected to have significant ramifications for the supermarket industry, particularly as the ACCC is pursuing a similar case against Woolworths at a later date.
The timing of this legal battle is notable, occurring during a period of reigniting inflation. Recent data from the Australian Bureau of Statistics shows that the Consumer Price Index rose 3.8% in the 12 months to December 2025, with food and non-alcoholic beverages contributing 3.4% to annual inflation, second only to housing costs.
Potential Penalties and Industry Impact
The ACCC is seeking substantial penalties and community service orders against Coles, which, along with Woolworths, controls approximately two-thirds of the Australian grocery market. This case puts supermarket pricing practices under intense scrutiny, highlighting concerns about consumer transparency and fair trading in a highly concentrated industry.
As the hearing continues, further details are anticipated to emerge, shedding light on the complexities of retail pricing and regulatory enforcement in Australia's competitive market landscape.
