The Australian Competition and Consumer Commission (ACCC) has commenced proceedings against Woolworths and Coles in the Federal Court for allegedly breaching Australian Consumer Law (ACL).
According to the ACCC, Woolworths and Coles raised prices on various products by at least 15%, before relabeling them with promotional slogans such as ‘prices dropped’ (Woolworths) and ‘Down Down’ (Coles). These slogans, which typically imply a lasting reduction in prices, were allegedly misleading, as the so-called promotional prices were the same or higher than the previous regular price.
The ACCC stated that they identified this conduct through social media monitoring and consumer feedback, which led to a comprehensive investigation leveraging compulsory powers. It found that 266 Woolworths products over a 20 month period and 245 Coles products over 15 months were included in this pricing strategy. Products affected included everyday household brands like Kellogg's Cereal, Arnott’s Tim Tam biscuits, Palmolive dishwashing liquid and Sprite soft drink. The ACCC estimates that Coles and Woolworths sold tens of millions of products using this method and generated significant profits.
The proceedings brought by the ACCC serves as notice to other retailers that such conduct will not be tolerated. In 2022, the maximum penalty for breaches of the ACL was increased, whereby companies can face a penalty greater of $50 million or three times the value derived from the relevant breach. If the value derived from the breach cannot be determined, the penalty is 30% of the company’s turnover during the period it the conduct occurred.
As consumers unknowingly continue to pay the same or even higher prices under the guise of discounts, their confidence in retail pricing is eroded, and fair market competition is distorted, prompting the need for an investigation into these practices.
For more details, read the full ACCC media release here:
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