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Highlights
- Coles and Woolworths challenge ACCC's claims on misleading discounts.
- ACCC accuses both companies of promoting "illusory" discounts.
- Legal proceedings are scheduled to continue in December.
Coles Group Ltd (ASX:COL) and Woolworths Group Ltd (ASX:WOW) are pushing back against accusations from the Australian Competition and Consumer Commission (ACCC) regarding their discount campaigns. Both supermarket chains are facing legal action over allegations that their promotions, including "Down Down" by Coles and "Prices Dropped" by Woolworths, misled consumers by advertising discounts that were, according to the ACCC, "illusory."
The ACCC claims that these campaigns featured price reductions that were not genuine, listing hundreds of products across both supermarkets that were part of the dispute. For instance, Woolworths' list included 266 items, while Coles had 245 items in question. These included various everyday items such as coffee, dog treats, hand wash, and soft drinks.
The issue stems from the significant price increases in recent times, with Coles and Woolworths attributing these to rising costs imposed by suppliers. The supermarkets argue that these price adjustments are a reflection of the broader inflationary environment, where costs for goods have surged due to external factors, particularly at the supplier level. This response forms the core of their defence against the ACCC's claims.
Legal proceedings were initiated in September, with both Coles and Woolworths appearing at a joint case management hearing at the Federal Court of Australia in October. Lawyers representing both companies presented their arguments, strongly opposing the ACCC’s accusations.
Coles' legal team, led by John Sheahan KC, argued that the price increases were driven by real cost rises from suppliers. Sheahan stated that the final discounted prices should be evaluated in the context of these supplier-imposed costs, which needed to be recouped. According to Coles, there was no manipulation of prices or any element of artificiality as suggested by the ACCC's case.
Similarly, Woolworths' legal counsel, Cameron Moore SC, labelled the ACCC's case as “misconceived.” He argued that Woolworths' pricing strategy during the campaigns reflected the reality of the economic pressures impacting suppliers and, consequently, the retail prices.
The court proceedings will continue, with Federal Court Judge Michael O’Bryan overseeing the case. A formal date has been set for December, when further legal arguments are expected to unfold.
In market activity following the hearing, Coles' shares increased by 1.28%, reaching $18.14, while Woolworths saw a 1.63% rise, closing at $33.07. These stock movements suggest investor confidence in the companies' ability to handle the ongoing legal challenges.
