Coles, Woolworths point finger at suppliers over dodgy discount claims

Supermarket giants Coles and Woolworths have attempted to shift damning allegations they scammed customers with fake discounts on hundreds of products onto their suppliers.

In a blistering opening salvo before the Federal Court on Wednesday to defend allegations of dodgy discount behaviour, separate lawyers for Australia’s biggest grocery giants said price hikes on wide variety of products followed the requests of their suppliers, who pushed for the increase to cover rising costs.

But they maintained the discounts that followed were “genuine”.

The cases have been brought by the Australian Competition and Consumer Commission, which will argue the companies violated consumer law by misleading shoppers on hundreds of popular supermarket items with their respective Down Down and Prices Dropped campaigns.

It’s alleged both supermarkets used similar “illusionary” ploys to increase prices of hundreds of products before dropping them as part of those campaigns.

The products — including dairy, pet food and personal care — sold for less than the inflated prices, but still more than the regular price that applied before the price spike.

Woolworths lawyer Cameron Moore SC told Justice Michael O’Bryan at the directions hearing the company had not initiated the temporary spikes in prices and the discounts were “factual”.

“The suggestion is that Woolworths initiated temporary price spikes and that’s not correct factually,” Mr Moore said.

“We say factually, the ACCC’s case is misconceived.”

John Sheahan KC, representing Coles, said the case was not as simple as alleged by the ACCC and any outcome could have significant implications for the industry.

Mr Sheahan said that in “almost every case” said of the price rises for 250 items highlighted by the ACCC were a result of requests from the grocery chain’s suppliers hit by high inflation.

“The ultimate discounted price, whether that was a genuine discount, has to be considered or assessed in light of the reality of the … (original) price … being the product of real cost increases imposed on a supplier which the supplier need to recoup,” he told the court, according to The Australian.

He said to test the ACCC’s claims of fake discounting, the court would need to examine how a product’s cost “came about”.

“Because the implication, what we think is implicit in words like “illusory” or “genuine”, is that there was some artificiality in the (original) price. And we say no,” he said.

But the ACCC’s counsel was quick to dismiss those suggestions.

“For your honour’s benefit and in terms of where this is going, I very much appreciate Mr Moore and Mr Sheahan outlining Coles and Woolworths respective positions — none of that takes the ACCC by surprise. And its position is, be that as it may, the conduct is still misleading,” The Australian reported.

The claims involve 266 products for Woolworths at different times across 20 months, and 245 products for Coles at different times across 15 months, amounting to “tens of millions” in sales from which both chains “derived significant revenue”, the ACCC said.

The watchdog will allege the supermarkets briefly jacked up the price of products at least 15 per cent before slapping on a Prices Dropped and Down Down discount.

That meant the product appeared cheaper when in fact it was more expensive than what it was before the short-term price spike.

Coles and Woolworths have until November 29 to file a written response to the ACCC’s allegations.

The parties will then return to the Federal Court in December for another case management hearing.

Justice Michael O’Bryan did not set down an exact date for the hearing.