Australian giant Coles misled shoppers with fake discounts, court rules

An important development from the financial markets: Australian giant Coles misled shoppers with fake discounts, court rules1 hour ago Share Save Add as preferred on GoogleHelen LivingstoneSydneyGettyAustralian supermarket Coles faces significant penalties after court ruling on fake discountsAustralian supermarket giant Coles misled consumers with fake discounts, the federal court has ruled in a landmark decision which could mean significant penalties. The country's consumer watchdog had sued Coles over its "Down Down" promotions on hundreds of items, arguing they were not really discounts as the supermarket had temporarily raised prices before the offers. On Thursday, Justice Michael O'Bryan, who is also presiding against a similar case against the supermarket Woolworths, agreed, ruling that the discounts were "not genuine".

Coles, which had rejected the allegation, said it was reviewing the judgement and that its priority "has always been ... delivering value to our customers. "In its case, the Australian Competition and Consumer Commission (ACCC) said Coles had misled customers over prices for 245 products, ranging from toothpaste to biscuits, across 15 months between February 2022 and May 2023.

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Of the 14 sample products and prices submitted as part of its case, the judge ruled that 13 did not represent a genuine saving and would have misled an ordinary consumer. O'Bryan said that products needed to have been sold at the higher price for at least 12 weeks before the discount could be considered genuine. "The Down Down tickets for the sample products would not have been misleading if the products had been sold at the 'Was' price for a minimum period of twelve weeks immediately preceding the Down Down promotion," he wrote.

A promotion for the fourteenth product, Nature's Gift Dog Food, was not misleading because it did not include a "was" price on the ticket, O'Bryan ruled. Woolworths and Coles, which account for two-thirds of the Australian market, have come under increasing scrutiny in the past year over alleged price gouging and anti-competitive practices. The ACCC has also launched a similar case against Woolworths, accusing it of misleading customers about 266 products over 20 months, with a decision expected later this year.

Coles said on Thursday the case highlighted "the need for clear, practical guidance on minimum price establishment periods to ensure the retail industry can avoid unnecessary litigation in future". Any fine, which would likely be significant, is to be decided at later hearings.

Financial markets are tracking the development closely as investors assess the likely impact.