Australia’s consumer watchdog is suing two of the country’s biggest supermarkets, alleging they lied about permanently reducing prices on hundreds of items.
The Australian Competition and Consumer Commission (ACCC) says Coles and Woolworths breached consumer law by temporarily raising prices before reducing them to the same or higher than actual cost.
Coles said it would respond to the allegations, while Woolworths said it would review the allegations.
The grocery giants, which account for two-thirds of Australia’s grocery market, have come under increasing scrutiny over the past year over allegations of price-cutting and anti-competitive practices.
After years of marketing campaigns, Australian consumers have learned that Woolworths’ ‘Prices Down’ promotion and Coles’ ‘Down Down’ sale mean a further drop in the regular prices of supermarket products, said ACCC chairwoman Gina Cass- Gottlieb.
But in many cases “the discounts were actually fake”, he added.
The agency’s investigation – prompted by complaints and the ACCC’s social media monitoring – found that Woolworths misled customers about 266 products in 20 months, and Coles about 245 products in 15 months.
Products included everything from pet food, Band-Aid plasters and mouthwash, to Australian favorites such as Arnott’s Tim Tam biscuits, Bega cheese and Kellogg’s cereals.
The ACCC estimated that the two companies “sold tens of millions” of affected products and “earned substantial profits from those sales”.
“Many consumers are relying on discounts to help their grocery budgets last, especially in this time of high cost of living,” said Ms. Cass-Gottlieb.
“It’s important that Australian consumers can trust the accuracy of prices and discount claims.”
It wants the Federal Court of Australia to impose “significant” fines on the two companies, as well as an order forcing them to fund charities to deliver food to Australians in need – in addition to their existing food aid programs.
In a statement, Coles said that the company’s costs are increasing, which has led to an increase in the price of products.
It “sought the right balance” between managing that and “providing value to customers while resuming promotional activity as soon as possible after the introduction of new non-promotional prices”, it said.
The company takes consumer law “very seriously” and “puts a lot of emphasis on building trust among all stakeholders”, it added.
Woolworths said in a statement that it would discuss the allegations with the ACCC.
“Our customers tell us that they want us to work even harder to deliver the value that matters to them and it’s important that they trust the value they see when they shop in our stores.”
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