An Australian consumer rights group has filed a lawsuit against the country’s two largest supermarket chains, alleging that they falsely claimed to have permanently slashed the prices of hundreds of items.
The Australian Competition and Consumer Commission (ACCC) alleges that Coles and Woolworths breached consumer law by temporarily increasing their prices and then lowering them to the same or higher price than before.
Coles said it would defend itself against the claims, while Woolworths said it would review the claims.
The grocery giants, which account for two-thirds of the Australian market, have come under intense scrutiny over the past year over allegations of price gouging and anti-competitive behaviour.
Premier Anthony Albanese said the allegations would be “completely unacceptable” if proven true.
“This goes against the Australian spirit. Customers should not be treated like fools,” he told a news conference, where he also unveiled a previously promised draft “code of conduct” for supermarkets.
ACCC chair Gina Cass Gottlieb said Coles and Woolworths had spent years advertising “price cuts” and “downs below” promotions, but Australian shoppers now understood these to mean sustained reductions in the regular price of goods.
But in many cases, “the discount was actually an illusion,” she added.
The watchdog’s investigation, triggered by complaints and the ACCC’s own scrutiny, found that Woolworths misled customers about 266 products over a 20-month period and Coles misled customers about 245 products over a 15-month period.
The products included everything from pet food, bandages and mouthwash to Australian favourites such as Arnott’s Tim Tam biscuits, Vega cheese and Kellogg’s cereal.
The ACCC estimates that the companies “sold tens of millions of units” of the affected products and “derived significant revenue from those sales”.
“Many consumers are turning to discounts to save money on their grocery budgets, especially during this time of rising living costs,” said Cass Gottlieb.
“It’s vital that Australian consumers can trust the accuracy of price and discount claims.”
The ACCC is asking the Federal Court of Australia to impose “significant” fines on the companies and order them to expand their charitable meal delivery programs.
In a statement, Kohl’s said its costs had risen, which led to higher product prices.
The company said it had “strived to strike the right balance” between managing that and “delivering value to customers” by resuming promotional activities “as soon as possible” after the new pricing.
The company took consumer law “very seriously” and “values building trusting relationships with all stakeholders,” it added.
In a statement, Woolworths said it would be discussing the allegations with the ACCC.
“Our customers tell us they want us to go the extra mile to provide them meaningful value, and it’s important that they can trust the value they see when shopping at our stores.”
Amid increased scrutiny of supermarkets, the government has commissioned a review of the country’s existing food and grocery codes of practice.
The inquiry recommended that the ACCC introduce and monitor a stronger, mandatory code of conduct to protect suppliers as well as consumers.
The new rules will set standards for deals between providers and companies who claim they are under undue pressure, and introduce huge fines for breaches.
