Australia’s consumer watchdog is suing two of the country’s biggest supermarket chains, accusing them of falsely claiming they had permanently reduced the prices of hundreds of items.
The Australian Competition and Consumer Commission (ACCC) has ruled that Coles and Woolworths breached consumer protection laws by temporarily raising prices before reducing them to the same or higher level.
Coles said it would defend itself against the allegations, while Woolworths said it would look into the complaints.
Grocery giants, which account for two-thirds of the Australian market, have come under increasing scrutiny over the past year over allegations of price gouging and anti-competitive behaviour.
Prime Minister Anthony Albanese said the alleged behaviour, if proven true, was “completely unacceptable”.
“This is not in the spirit of being Australian. Customers should not be treated like idiots,” he told a press conference, where he also unveiled draft legislation for a previously promised “code of conduct” for supermarkets.
ACCC Chair Gina Cass-Gottlieb said Coles and Woolworths had spent years marketing ‘Sale’ and ‘Price Cut’ promotions, which Australian shoppers now understood to be ongoing discounts on the regular price of products.
But in many cases, she added, “the discount is actually an illusion.”
The watchdog’s investigation – triggered by complaints and the ACCC’s own monitoring activity – found Woolworths misled customers about 266 products over 20 months and Coles about 245 products over 15 months.
Products include everything from pet food, bandages and mouthwash, to Australian favourites such as Arnott’s Tim Tam biscuits, Bega cheese and Kellogg’s cereals.
The ACCC estimates that the two companies have “sold tens of millions” of affected products and “received significant revenue from those sales”.
“Many consumers rely on discounts to help stretch their grocery budgets, especially during these times of rising living costs,” said Cass-Gottlieb.
“It is important that Australian consumers can have confidence in the accuracy of pricing and discount claims.”
The ACCC is asking the Federal Court of Australia to impose “significant” penalties on the two companies and order them to strengthen their charitable meal delivery programs.
In a statement, Coles said the company’s costs were rising, leading to higher product prices.
The company said it was “looking to strike the right balance” between managing that and “delivering value to customers” by relaunching promotions “as soon as possible” after the new prices were set.
The company added that it “takes consumer protection laws extremely seriously” and “places great emphasis on building trust with all stakeholders.”
Woolworths said in a statement it would work with the ACCC on these complaints.
“Customers tell us they want us to do more to deliver meaningful value to them, and it’s important that they can trust the value they see when they shop in our stores.”
Amid growing scrutiny of supermarkets, the government has ordered a review of the country’s current Food and Grocery Code of Conduct.
This review recommends that the ACCC introduce and monitor a stronger, mandatory code of conduct to protect both suppliers and consumers.
The new law will set standards for companies’ dealings with suppliers who they believe are being unfairly penalised, and introduce large fines for breaches.
