Australia’s Consumer Watchdog Sues Supermarket Giants Over Misleading Price Claims

Australia’s two largest supermarket chains, Coles and Woolworths, are facing legal action from the Australian Competition and Consumer Commission (ACCC), which alleges that the companies falsely claimed to have permanently dropped prices on hundreds of products. 

The ACCC accuses the grocery giants of violating consumer law by raising prices temporarily before lowering them to a value that was either the same as or higher than the original price.

Coles and Woolworths, which control two-thirds of the Australian grocery market, are under increasing scrutiny for alleged price gouging and anti-competitive practices. 

Prime Minister Anthony Albanese condemned the alleged conduct, saying, “Customers don’t deserve to be treated as fools. This is not in the Australian spirit.” 

Albanese also introduced draft legislation for a new code of conduct aimed at regulating supermarket practices.

The ACCC’s investigation, launched after receiving complaints and conducting internal monitoring, found that Woolworths misled consumers on the pricing of 266 products over 20 months, while Coles did the same for 245 products across 15 months. 

The products involved ranged from household staples like pet food and mouthwash to beloved Australian favorites like Arnott’s Tim Tam biscuits and Bega Cheese.

ACCC chair Gina Cass-Gottlieb stated that the supermarket chains’ “Prices Dropped” and “Down Down” campaigns, which claim to represent sustained price reductions, had, in many cases, been misleading. 

“The discounts were, in fact, illusory,” she said, adding that the companies had sold “tens of millions” of affected products and generated significant revenue as a result.

The ACCC is seeking “significant” penalties from the Federal Court of Australia and has requested that both companies expand their charitable meal delivery programs to address the impact on consumers. 

Cass-Gottlieb stressed the importance of transparent pricing, particularly in the current economic climate.

 “Many consumers rely on discounts to help their grocery budgets stretch further during this time of cost of living pressures,” she said.

In response to the lawsuit, Coles stated that rising costs had necessitated price increases and that it had balanced these pressures by resuming promotions “as soon as possible.” Woolworths, meanwhile, promised to engage with the ACCC and said it remained focused on delivering meaningful value to customers.

As pressure mounts on the supermarkets, the Australian government has initiated a review of the existing Food and Grocery Code of Conduct. 

The review recommended a stricter, mandatory code to protect both consumers and suppliers, including provisions for large fines in cases of misconduct. This new code is expected to be enforced by the ACCC.

Chioma Kalu

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