Tim Tams at centre of ‘fake discounts’ case against Woolies
Woolworths is in court after the consumer watchdog claimed it used misleading advertising in discounts over millions of supermarket sales.
Supermarket giant Woolworths will defend its discounting regime in court against consumer watchdog claims it used fake discounts to mislead customers despite higher prices.
Woolworths will present its case to the Federal Court after Coles made its defence in February, with the court withholding judgment until both grocery juggernauts have offered their arguments.
The Australian Competition and Consumer Commission launched the joint action in 2024, alleging the pair broke consumer law by hiking prices on everyday items for brief periods before reducing them as part of their separate “Prices Dropped” and “Down Down” promotions.
The discounted prices were often the same or higher than the original shelf prices and therefore deliberately misled consumers, the ACCC claims.
The watchdog alleges the conduct involved 266 products for Woolworths at different times across 20 months between late 2021 and mid-2023, impacting tens of millions of sales by itself and Coles.
The product list was pared down to 12 agreed items to be scrutinised in court, including a Tim Tams Family pack, Carman’s classic fruit and nut muesli bars and Sakata rice crackers.
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“We allege these misleading claims about illusory discounts diminished the ability of consumers to make informed choices about what products to buy, and where,” ACCC chair Gina Cass-Gottlieb said.
The watchdog is not alleging Coles and Woolworths have colluded or engaged in anti-competitive behaviour.
In a statement, Woolworths said it fundamentally disagreed with the claims and had never misled or deceived its customers.
“Following Covid, there was a period of extraordinary inflation, and we were acutely aware that customers expected Woolworths to provide value wherever possible,” the spokesman said.
“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 supermarket giant said it respected the ACCC’s role and took the allegations seriously.
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In a report last year, an ACCC report found
In its report, the ACCC described the supermarket sector had an “oligopolistic market structure” dominated by the duopoly of Woolworths and Coles.
The two “very large” supermarket chains, which have 38 per cent and 29 per cent of national grocery sales respectively, have “limited incentive to compete vigorously with each other on price”, the report found.
The case resumes as another wave of inflation is set to hit Australian consumers due to soaring oil prices sparked by the US-led war on Iran.
Australia’s supermarket sector has come under heavy scrutiny after cost pressures borne by the Covid-19 pandemic, prompting multiple inquiries.
One such probe found Australian supermarkets to be some of the world’s most profitable, with margins expanding in the years after the pandemic.
It found no evidence of price gouging, but the watchdog has flagged potential future legal action through new excessive pricing laws set to come into effect in 2026.
Coles and Woolworths account for roughly two-thirds of the Australian supermarket industry.
-AAP
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