The Australian Competition and Consumer Commission's (ACCC) landmark trial against Woolworths has entered its second week, with the court hearing that the supermarket giant breached its own internal guidelines designed to prevent price manipulation. The consumer watchdog alleges that Woolworths and rival Coles engaged in deceptive pricing practices between 2021 and 2023, temporarily inflating prices before placing products on 'sale' at levels higher than their previous long-term shelf price.
Testimony on Laundry Powder Pricing
On Tuesday, Woolworths' commercial pricing manager, Callum Davies, faced cross-examination from ACCC barrister Michael Hodge KC. The focus was on a specific product: the 2kg Fab 'Fresh Blossoms' laundry powder. According to court documents, the product was sold for $7 for 425 days until March 2022. Woolworths then doubled the shelf price to $14 for just 19 days before reducing it to $8 and advertising it under its 'Prices Dropped' promotion.
Davies admitted under questioning that he had assumed at the time that Woolworths had followed its own rules, which require a product to maintain a new price for at least four weeks before being eligible for a 'Prices Dropped' promotion. However, he conceded that the rules were not complied with. 'Yes, I agree,' Davies said when asked if the internal rules were violated.
Intent to Establish Higher Shelf Price
The court heard that the primary reason for increasing the price to $14 was to establish a higher baseline so that the subsequent discount could be advertised. Davies acknowledged that during negotiations with the supplier, he did not intend for the product to remain at $14 and expected the price to be reduced 'in the near term.' He noted that $14 would 'not have been a competitive price point' for the laundry powder.
Earlier testimony revealed that Woolworths coordinated with suppliers to raise shelf prices in advance, enabling the display of 'was/is' price comparisons on promotional tickets. The court was also informed that Henkel, the owner of Fab laundry products, requested that the powder be placed on the 'Prices Dropped' program as soon as possible due to potential price reductions by competitors.
The trial, which is examining 12 products in detail, continues in the Federal Court. The ACCC's case against Woolworths and Coles represents a significant legal challenge to supermarket pricing practices in Australia.
