Coles has argued that shoppers would not have understood much from its prominent “Down Down” marketing campaign, on the second day of a federal court case brought by the Australian Competition and Consumer Commission (ACCC). The ACCC alleges Coles misled customers with “illusory” discounts on hundreds of household products.
Justice Michael O’Bryan, overseeing the case, questioned Coles’s explanation of what the “Down Down” campaign communicated to consumers. “I don’t know if I’ve seen a statement from Coles which directly answers that question,” he said, according to reports from the Australian Broadcasting Corporation. John Sheahan KC, representing Coles, responded that consumers would likely take “not much” from the advertising and the imagery of red hands pointing downwards, characterizing it as an indication that Coles was “trying to maintain prices low.”
The ACCC’s case, described by former ACCC boss Allan Fels as “the case of the century,” centers on allegations that Coles artificially inflated prices for short periods before applying discounts under the “Down Down” promotion, creating the impression of savings when, in many cases, prices were either the same as or higher than usual. The consumer watchdog is seeking significant penalties and community service orders against the supermarket giant, which, along with Woolworths, controls two-thirds of the Australian grocery market.
Coles countered that the ACCC’s case was overly complex, arguing that it relied on an unrealistic expectation that consumers understood the intricacies of pricing negotiations with suppliers and the factors influencing price setting. Mr. Sheahan asserted that the average shopper was primarily concerned with whether a discount was “fair dinkum,” a colloquial Australian expression meaning genuine or honest.
The court heard details of Coles’s pricing strategy for specific items, including a 1.2 kilogram loaf of Nature’s Gift Wet Dog Food. According to the ACCC, the dog food was priced at $4 for almost 300 days between April 2022 and February 2023. The price was then briefly increased to $6 for seven days, before being reduced to $4.50 and labelled “Down Down.” The ACCC contends this practice was “utterly misleading,” as it did not disclose the short period of inflated pricing.
Coles defended its pricing practices, arguing that all prices were temporary and that both sides accepted the accuracy of the price tickets displayed in stores. The supermarket also maintained that, for most of the 245 items under scrutiny, prices were raised for a period of four to six weeks, allowing for a substantial volume of sales at the higher price before the discount was applied. The company also argued the ACCC had not established a clear definition of what constituted a “regular price” or how long it should be maintained.
The case continues, with proceedings expected to last for the next fortnight. The outcome could have significant implications for supermarket pricing practices in Australia and potentially pave the way for similar legal challenges against other major retailers, including Woolworths, which is facing an almost identical lawsuit.