Anthony Albanese hits out as ACCC takes Coles and Woolies to court over alleged dodgy sale prices
Prime Minister Anthony Albanese says supermarket customers “don’t deserve to be treated as fools” as Woolies and Coles are called out.
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Anthony Albanese has lashed major supermarkets for treating Australians “as fools” after the consumer watchdog announcedit would be launching legal action against Coles and Woolworths for allegedly making misleading claims about discounts.
The government on Monday announced it was launching a draft of a new grocery code that could slap major supermarkets with multimillion-dollar penalties for serious breaches.
The Prime Minister said consumers deserved to “get a fair go when families are doing it tough”, adding that Australians needed a “tough consumer cop on the beat”.
“These are serious allegations that the ACCC (Australian Competition and Consumer Commission) is bringing before the courts. If this is found to be true, it’s completely unacceptable,” Mr Albanese told reporters.
“This is not the Australian spirit. Customers don’t deserve to be treated as fools by the supermarkets. They deserve much, much better than that.”
The ACCC alleged both major supermarkets temporarily hiked prices by at least 15 per cent before slapping them with promotional discount stickers at prices higher than before the hike.
The ACCC said Woolworths did this for 266 products in its Prices Dropped promotion over a period of 20 months, while Coles did it for 245 products in its Down Down promotion across 15 months.
Mr Albanese said households were “on the hunt for discounts” when doing their weekly shops “because every dollar matters.”
“When people get to the checkout, advertised discounts need to be genuine each and every time,” he said.
“Specials need to be real because household budgets are tight.”
The new code aims to boost protections for suppliers, introducing stronger dispute resolutions provisions and guards to prevent suppliers from supermarket retribution.
There will also be expanded protections for whistleblowers to ensure their identities are kept secret.
Asked if Costco or Amazon would be bound by the new code, Mr Albanese did not rule it out but said that would be hashed out in further examination.
In scathing comments, ACCC chair Gina Cass-Gottlieb slammed Coles and Woolworths, saying they breached the Australian Consumer Law by making “misleading claims about discounts when the discounts were, in fact, illusory”.
She said the supermarkets’ actions were deliberate, alleging that “both Woolworths and Coles had already planned to later place the products on a Prices Dropped or Down Down promotion before the price spike and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price.”
Woolworths said it would “carefully review” the claims, while Coles said it intended to defend itself.
The watchdog began investigating when consumers contacted the ACCC, which tracked prices on social media before running an in-depth investigation.
Many consumers relied on discounts during this cost-of-living crunch, Ms Cass-Gottlieb said.
“It is critical that Australian consumers are able to rely on the accuracy of pricing and discount claims.”
“We allege these misleading claims about illusory discounts diminished the ability of consumers to make informed choices about what products to buy, and where.”
In court, the consumer watchdog will push for the supermarkets to pay penalties, costs, and will seek court-ordered declarations.
If it is successful, the ACCC will also ask the court to impose community service orders mandating the supermarkets each fund a registered charity to deliver meals to Australians in need, in addition to their pre-existing charitable meal delivery programs.
Consumer Champion’s Adam Glezer said the allegations against Coles and Woolworths were a “real kick in the guts for everyday Australians”.
“Firstly I’d like to commend the ACCC for moving on this, especially in the current environment with all of the interest rate hikes and with the majority of Australians more budget conscious than ever,” he said.
“As a result, consumers are looking for specials more than ever before, and big corporations should not be taking advantage of the current climate.
“It’s not just illegal, it’s un-Australian.”
In a statement to the ASX, a Coles spokesperson said the allegations related to a time of significant cost inflation “when Coles was receiving a large number of cost price increases from out suppliers and, in addition, Coles’ own costs were rising, which led to an increase in the retail price of many products”.
The supermarket “sought to strike an appropriate balance” between business costs, retail prices and offering value to customers.
The company said Down Down was “one type of promotional campaign involving a longer-term reduction in the retail price of a product”.
“Coles is acutely aware of the cost-of-living pressures affecting households,” the spokesperson said.
In a statement, Woolworths said it “will carefully review the claims made by the ACCC and will continue to engage with the ACCC on the matter”.
Newly installed Woolworths Group chief executive Amanda Bardwell said cost of living was a key issue for millions of Australians “who shop with us every week”.
“Our customers are telling us they want us to work even harder to deliver meaningful value to them and it’s important they can trust the value they see when shopping our stores,” Ms Bardwell said.
“Our Prices Dropped program was introduced to provide our customers with great everyday value on their favourite products.
“We remain committed to offering many ways for customers to save at the checkout, including thousands of weekly specials, everyday low prices on household essentials, a great value own brand range and through our Everyday Rewards program.”
In a lengthy media release on Monday morning, the ACCC sets out some of its evidence.
The watchdog alleges the supermarkets offered certain products at a regular price for at least 180 days, then increased the price of the product by at least 15 per cent for a relatively short period of time before the items went onto the Prices Dropped or Down Down program.
The Woolworths allegations relate to prices from September 2021 to May 2023.
Products affected include Arnott’s Tim Tams biscuits, Dolmio sauces, Doritos salsa, Energizer batteries, Friskies cat food, Kellogg’s cereal, President butter, Listerine mouthwash, Moccona coffee capsules, Mother energy drinks, Mr Chen’s noodles, Nicorette patches, Ocean Blue smoked salmon, Oreo cookies, Palmolive dishwashing liquid, Raid insect spray, Sprite soft drink, Stayfree pads, Twisties, Uncle Tobys muesli bars and Vicks VapoDrops.
From at least January 1, 2021 until November 27, 2022, the ACCC alleges Woolworths offered the Oreo family pack original 370g product for sale at a regular price of $3.50 on a pre-existing Prices Dropped promotion.
The Oreo price then went up to $5 for 22 days. Then on December 20, the Oreos went on a Prices Dropped promotion at $4.50 – 29 per cent higher the original price, the ACCC alleged.
“In this example, the ACCC alleges Woolworths had planned the temporary price spike to establish a new higher ‘was’ price for the subsequent ‘promotion’,” the ACCC said.
The ACCC has gathered evidence on Coles prices between February 2022 and May 2023.
Products include Arnott’s shapes biscuits, Band-Aids, Bega cheese, Cadbury chocolates, Coca Cola soft drink, Colgate toothpaste, Danone yoghurt, Dettol multipurpose wipes, Fab laundry liquid, Karicare formula, Kellogg’s snack bars, Kleenex tissues, Libra tampons, Lurpak butter, Maggi two-minute noodles, Nature’s Gift dog food, Nescafe instant coffee, Palmolive shampoo, Rexona deodorant, Sakata rice crackers, Sanitarium Weet-Bix cereal, Strepsils lozenges, SunRice rice, Tena pads, Viva paper towels, Whiskas cat food and Zafarelli pasta.
From January 2021 to October 2022, it alleged Coles was selling Strepsils throat lozenges honey and lemon 16 pack for $5.50 on a pre-existing Down Down promotion.
In October, the price went up to $7. Four weeks later the lozenges were on a Down Down ticket for $6, while the ticket stated the previous price was $7, the ACC alleged.
“In this example, the ACCC alleges Coles had planned the temporary price spike to establish a new higher ‘was’ price for the subsequent ‘promotion’,” it said.
Speaking to media on Monday morning, Ms Cass-Gottlieb would not be drawn on how much the ACCC would seek for the supermarkets to pay should the court rule in favour of the ACCC, other than to say any penalties should be significant.
The maximum penalty for each breach of the Australian Consumer Law increased in 2022 to whichever is higher of $50m or three times the value of the “reasonably attributable” benefit obtained.
If the “reasonably attributable” benefit cannot be established, the penalty can be 30 per cent of the corporation’s adjusted turnover during the breach period.
The Federal Court will now review the ACCC filings. A court date has not been set.
Shares in Woolworths and Coles were both down about 3.5 per cent in morning trading.
Originally published as Anthony Albanese hits out as ACCC takes Coles and Woolies to court over alleged dodgy sale prices
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