Coles Defends Pricing Strategy in Federal Court as ACCC Alleges 'Misleading' Discounts
Coles is set to defend allegations from the Australian Competition and Consumer Commission (ACCC) in federal court, arguing that recent pricing adjustments were a direct response to increased costs from suppliers. This high-profile case, which began on Monday, scrutinizes the supermarket's pricing practices between February 2022 and May 2023, with potential ramifications for the entire grocery industry.
ACCC Claims 'Down Down' Promotions Were 'Illusory'
The ACCC has accused Coles of breaching consumer law by offering discounts that were "literally true" but "utterly misleading." According to the regulator, Coles disguised price increases on at least 245 products through its "Down Down" promotion, a strategy involving "was/is" comparative pricing. The ACCC alleges that products were sold at a regular price for at least six months before being temporarily inflated and then slightly reduced, creating the illusion of a discount.
In opening submissions, barrister Garry Rich SC, acting for the ACCC, provided a detailed example involving Coles' pricing of 1.2kg cans of Nature's Gift wet dog food. He stated that Coles sold the product for $4 over 296 days from April 2022 to February 2023, then increased the price by 50% to $6 for just seven days. After this brief spike, Coles lowered the price to $4.50 and marketed it as a "Down Down" sale, claiming the previous price was $6.
Rich argued that while technically true, this pricing tactic was deceptive. "A consumer who knew the real facts would not think the price of the dog food had gone down," he told the court. "Nor would they think the price of $4.50 was a genuine reduction or discount."
Coles' Defense and Broader Industry Implications
Coles will counter the ACCC's claims by asserting that the pricing changes were necessitated by rising supplier costs. However, the ACCC contends that Coles misled customers by temporarily spiking retail prices higher than necessary and then presenting the new regular price as a discount. "In our submission, Coles misled its customers into thinking it had reduced its regular prices when in the space of about a month Coles had implemented a price increase for those products," Rich explained.
This case places supermarket pricing practices under intense scrutiny and could impact a similar ongoing case against Woolworths, which is scheduled for a later hearing. The ACCC is seeking significant penalties and community service orders against Coles, a key player in Australia's grocery market, where Coles and Woolworths collectively control two-thirds of sales.
Context of Rising Inflation and Consumer Costs
The legal battle unfolds against a backdrop of reigniting inflation, with groceries and household expenses climbing sharply. According to the Australian Bureau of Statistics, the Consumer Price Index rose 3.8% in the 12 months to December 2025, up from 3.4% in the previous period. Spending on food and non-alcoholic beverages contributed 3.4% to annual inflation, second only to housing costs, highlighting the financial pressure on consumers.
Justice Michael O'Bryan is presiding over the 10-day hearing in Melbourne, which will delve deeper into Coles' pricing strategies. As the case progresses, it is expected to reveal more details about how supermarkets manage pricing in response to economic fluctuations and regulatory oversight.
