Former ACCC boss Alan Fels says Woolworths will struggle to defend regulator’s action

Former ACCC boss Alan Fels believes Woolworths misled customers over fake discounts and is likely to lose its ongoing Federal Court case against the competition regulator to some extent.

Mr Fels told The Nightly he thought Woolworths had deceived shoppers by advertising discounted shelf prices for 266 products, including including Oreo cookies, Arnott’s Tim Tam biscuits and Dolmio sauces, between September 2021 and May 2023.

Woolworths is accused by the ACCC under chairwoman Gina Cass-Gottlieb of deliberately implementing short-term price rises for the products, before placing them on a Prices Dropped promotion at a long-term lower price.

“I’d like to think I can see all sides of the arguments, but I lean a little to the view they’ll be found to have fake discounts, but Woolworths have put up a big fight over it,” said Mr Fels.

“Woolworths are running a story (defence) that there’s a lot of inflation at the time (of the promotions), but that doesn’t excuse it because no one is arguing they shouldn’t put the price up, they have just done so in a misleading way.

“It gives consumers the wrong impression because they’re tricked into thinking they’re getting a bargain.”

Woolworths rejects regulator’s claims

The ACCC’s lawyer Michael Hodge KC has argued Justice Michael O’Bryan should find in the regulator’s favour because shoppers were not receiving “genuine” discounts.

Woolworths denies the claims and argues it always followed applicable consumer laws in its defence. It has also told the court that suppliers had requested cost increases in almost all the instances of price rises preceding sales promotions.

“In a narrow sense it is literally true they’re reducing the price, but something can be literally true and misleading and deceptive,” said Mr Fels, who served as chairman of the ACCC from 1995 to 2003.

“So, you have to tell the truth, and the whole truth. And they (Woolworths) don’t tell the whole truth, they just tell a bit of it, so I think they will struggle on that is my core view.”

Genuine discounts or not

Court documents show that Woolworths typically ran the Price Dropped promotions for 12 weeks at a time, although some ran for six months or longer.

The Prices Dropped promotions were also distinct from Specials promotions, with the latter marketed to shoppers as a temporary, or short-term discounts.

The Prices Dropped labels were also normally displayed as in-store paper tickets on shelves, or as online product tiles on the Woolworths online shopping website.

Mr Fels added that the law has to strike the right balance between allowing retailers to promote their products in sales at the same time as protecting consumers’ rights.

But the law professor and competition policy expert warned Woolworths may struggle to prove the price cuts were genuine discounts.

“They (Woolworths) rather deceptively put the price up to say $12 for say three or six weeks and then bring it down and it’s all pre-planned and then they say there’s a price cut.

“So, to my mind that is deceptive and planned. It’s not like a genuine discount when a clothing shop can’t sell something and drops the price for a few days.”

The Federal Court hearing started on April 21. It will resume in Sydney’s central business district on Tuesday and is scheduled to last the rest of the week.

Rival supermarket giant Coles has also faced a similar Federal Court case versus the ACCC in relation to its Down, Down price promotions, with the complex case yet to be decided.

Shares in Woolworths are up 19 per cent over the past 12 months and last closed at $37.69.

Coles shares have added 7.3 per cent over the same period and last fetched $22.95.