Woolworths Denies Corporate Watchdog Claims of Fake Discounts in Federal Court
Supermarket giant Woolworths has firmly rejected allegations from the corporate watchdog that it deceived Australian consumers with misleading discount campaigns. In a Federal Court hearing on Tuesday, the company argued that the Australian Competition and Consumer Commission (ACCC) has fundamentally misrepresented the commercial realities driving shelf prices.
Price Increases Driven by Inflation, Not Deception
Woolworths' legal team, led by Robert Yezerski SC, denied claims that the supermarket temporarily inflated prices on hundreds of items before reducing them by a lesser degree to conceal increases from shoppers. The defence argued that price adjustments sometimes fell below suppliers' recommendations and occurred against a backdrop of significant post-COVID-19 pandemic inflation.
'Woolworths was facing significant cost price increases from a large number of suppliers across their full range of products,' Yezerski told the court. 'To suggest Woolworths is engaged in manufacturing prices to then show a drop completely misrepresents the true nature of commercial negotiations.'
The defence maintained that inflationary impacts—which affected grocery items more severely than other products and services between late 2021 and mid-2023—were relatively consistent across competitors Coles and Aldi.
Duration of Price Elevations Key to Case
Justice Michael O'Bryan indicated that determining the case would hinge on how long prices were temporarily elevated. 'One tends to think if the price establishment period was three months, we wouldn't be here,' Justice O'Bryan observed. 'If it was always one week, the case might not be fought. We're somewhere in between, and that's what makes this case rather difficult.'
The ACCC's legal team, represented by Michael Hodge, alleged Woolworths employed misleading tactics in its 'prices dropped' campaign. 'The subtle magic of the 'prices dropped' message that draws the consumer in is to say that the new stable price is lower than the old stable price,' Hodge earlier told the court.
Background of the Legal Action
The ACCC launched joint proceedings in 2024 against both Woolworths and Coles, alleging the supermarket giants breached consumer law by using fake discounts to mislead customers. The competition watchdog claims reduced prices were often the same or higher than original shelf prices, thereby deliberately deceiving consumers.
Woolworths discontinued the marketing campaign after the ACCC initiated legal action. Coles presented its defence in February, but the court's final judgment will be reserved until both supermarket juggernauts have completed their cases.
The commission alleges the conduct involved 266 products sold by Woolworths at various times across 20 months between late 2021 and mid-2023, affecting tens of millions of sales by Woolworths and Coles combined. The product list has been narrowed to 12 agreed items for court scrutiny, including:
- A family pack of Tim Tams biscuits
- Carman's classic fruit and nut muesli bars
- Sakata rice crackers
Woolworths' Official Response
In a statement to AAP, Woolworths said it fundamentally disagrees with the ACCC's claims and never misled or deceived customers. 'Following COVID, there was a period of extraordinary inflation, and we were acutely aware that customers expected Woolworths to provide value wherever possible,' a company spokesman stated.
'Inflation also put pressure on our suppliers' costs, and we worked with them to reduce the inflationary impact on customers through our 'prices dropped' program.'
The ACCC has clarified it is not alleging Coles and Woolworths colluded or engaged in anti-competitive behaviour as part of the misleading conduct claims.
Broader Supermarket Sector Scrutiny
Australia's supermarket sector has faced intense scrutiny following cost pressures from the COVID-19 pandemic, resulting in multiple inquiries. One investigation found Australian supermarkets to be among the world's most profitable, with margins expanding in post-pandemic years.
The Federal Court case resumed on Wednesday for the second of eight scheduled hearing sessions, with the outcome potentially setting significant precedents for retail pricing practices nationwide.
