Updated ,first published
Watch Federal Court Justice Michael O’Bryan deliver his decision live here.
Coles misled Australians over several years through its “Down Down” program, the Federal Court has determined, finding that it advertised fake discounts to shoppers in a landmark decision.
Federal Court Justice Michael O’Bryan read out his judgment from a Melbourne courtroom, upholding allegations from the Australian Competition and Consumer Commission (ACCC) that Coles’ discounts were based on increased prices that were available for too short a period.
The regulator argued that Coles artificially jacked up prices for hundreds of products for a brief period so they could say their new prices were a reduction on its previous one, when in fact the “Down Down” price was higher than just a few weeks before.
Coles defended the claims, arguing their discounts were genuine specials to help customers and sales after prices rose because of inflation.
O’Bryan found that Coles increased prices because suppliers wanted that to happen. “Coles increased the prices in a commercially justifiable manner,” O’Bryan said in a summary of his judgment.
But he said that they needed to be sold for 12 weeks at the higher price before customers would consider the discounts genuine. Most of Coles’ products were at the higher price for just four weeks. As a result, he found Coles had misled customers.
“The relevant products were not sold at the was price stated on the ticket or a reasonable period, and, as a consequence, the discount represented on the tickets was not genuine,” O’Bryan said.
“In offering the sample products on those ‘Down Down’ tickets, Coles engaged in conduct in trade or commerce that was misleading, in contravention of…the Australian Consumer Law, and made a misleading representation with respect to the price of the sample products.”
O’Bryan’s judgement pressages his ruling in the separate, but very similar proceedings against Woolworths, which he is also presiding over. In that case, the ACCC alleged similar misleading conduct by Woolworths over its “Prices Dropped” program, with the discounts examined during Sydney court hearings covering products also sold at their higher secondary price for shorter than 12 weeks.
At the height of public fury about inflation in late 2024, the consumer watchdog lobbed legal bombshells at Coles and Woolworths by accusing them of the fake discounts on products that were the same price or even higher than before.
The consumer watchdog alleged Coles misled shoppers in relation to “Down Down” pricing across 245 products when filing the initial legal action.
But for the two-week hearing, the parties agreed to focus on a small number of sold between January 2021 and May 2023, including 2 litre bottles of Coca-Cola, Colgate toothpaste, 900 gram tins of Karicare baby formula, Rexona deodorant, Lurpak butter and a box of Arnott’s Shapes.
The court heard the example of Nature’s Gift Wet Dog Food, which was priced at $4 between April 18, 2022, and February 7, 2023. It increased to $6 for seven days – its second price – before Coles introduced its third price, $4.50, advertising it as a discount from $6.
In another example tendered in documents and discussed in court, Shapes biscuits were sold for $5 a packet in 2021, then got as high as $6.50 and went back to $5.50 on a Coles promotion.
Of the 14 sample products, O’Bryan found 13 had been sold in a misleading manner. Pricing for one item, a dog food product, was not considered to have misled shoppers because its shelf labels did not include a was price comparing it to the temporarily higher price preceding its special.
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.
