Coles misled shoppers with illusory discounts, a court has ruled after a landmark case brought by the consumer watchdog.
This morning, Federal Court judge Michael O’Bryan delivered his ruling, finding Coles deliberately disguised price hikes as discounts under its “Down Down” price campaign.
“Thirteen of the 14 ‘Down Down’ tickets that were the subject of consideration in the joint liability trial were misleading because the relevant products were not sold at the ‘was’ price stated on the ticket for a reasonable period,” Justice O’Bryan said.
“As a consequence, the discount represented on the tickets was not genuine.”
The decision could mean the $28 billion company is hit with significant penalties, which will be the subject of argument by the parties.
The penalties could technically attach to every time a contravening product was advertised, Melbourne University consumer law expert Jeannie Paterson said.
“The penalties could be colossal, absolutely colossal, because it’s per contravention,” she told AAP.
Professor Paterson said rather than impose a meaninglessly large penalty, the court will look at Coles’ culpability, the steps it took to mitigate harm and the period of time over which the breaches occurred.
Australian Competition and Consumer Commission chair Gina Cass-Gottlieb, speaking today after the court ruling, said the watchdog welcomed the court finding and would be seeking “a substantial penalty”.
Cass-Gottlieb said companies should continue to offer discount programs for their customers.
“But it has to be accurate and well understood by consumers, given the consumer’s understanding of the program and promotion in which they place it.”
The ACCC brought separate but similar cases against the country’s two dominant supermarket chains with a Woolworths suit awaiting judgment at a later date.
Both cases alleged the supermarkets misled consumers by increasing prices for a short time before lowering them to above the original price and marketing it as a discount.
In one instance, a can of Nature’s Gift dog food was on sale for $4 nearly a year before the price was briefly increased to $6.
It was then sold under a “Down Down” ticket for $4.50.
The watchdog identified hundreds of products on the Coles campaign and a similar “Prices Dropped” push from Woolworths that followed a similar formula.
During separate hearings, lawyers for the supermarkets argued prices increased due to inflationary pressures and the discounts were genuine.
ACCC barrister Garry Rich SC argued during hearings that Coles was trying to avoid losing customers by disguising price increases as discounts.
“Why on earth are you telling your customers your prices are going down? They’re not,” he told the court.
But Coles’ barrister John Sheahan argued “ordinary, reasonable consumers” knew that prices generally trended upward due to inflation.
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