Coles, Woolworths Sued by Regulator for Misleading Discounts

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(Bloomberg) — Australia’s competition regulator has filed a lawsuit against Coles Group Ltd. and Woolworths Group Ltd., the country’s two largest supermarket chains, over allegations they misled shoppers about discount claims on hundreds of popular products.

The ACCC alleges that retailers sold products at regular long-term prices for at least six months before increasing them by at least 15% for a short period. The products were then placed on Woolworths’ “Prices Dropped” and Coles’ “Down Down” promotions at prices lower than those during the price hike but higher than or equal to the regular price that applied before the hike, the ACCC said in a statement on Monday.

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“After many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that ‘price drop’ and ‘price drop’ promotions are about a continued reduction in the regular prices of supermarket products,” ACCC Chair Gina Cass-Gottlieb said in the statement. “However, in the case of these products, we allege that the new ‘price drop’ and ‘price drop’ promotional prices were actually higher than or equal to the previous regular price.”

Australia has one of the most concentrated supermarket sectors in the world, with Woolworths and Coles controlling more than half the market, according to Bloomberg Intelligence. Both chains have come under political fire during cost-of-living pressures caused by persistently high inflation.

29% higher

The latest inflation data for the quarter to June showed that the biggest contributors to prices were housing and food, including non-alcoholic beverages. Data from the Australian Bureau of Statistics showed that the rise in food and non-alcoholic beverage prices was driven by fruit and vegetables, meals out of the home, ready-to-eat food, and meat and seafood.

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The competition regulator alleges Woolworths made false or misleading statements about the prices of 266 products – including Tim Tams biscuits, Mother energy drinks and Palmolive dishwashing liquid – between September 2021 and May 2023.

In one example cited, from at least 1 January 2021 until 27 November 2022, Woolworths offered Oreo Family Pack Original cookies at the regular price of A$3.50 (US$2.38) for at least 696 days.

On 28 November 2022, the price was increased to AUD $5.00 for 22 days. On 20 December 2022, cookies were put on a “price drop” promotion with a new price of AUD $4.50 and a “previous” price of AUD $5.00.

The regulator said the “drop price” of A$4.50 was actually 29% higher than the previous regular price.

—With assistance from Swati Pandey.

(Adds regulatory comment from third paragraph.)

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