The consumer watchdog's victory against Coles this week is expected to cost the company tens of millions of dollars — but class action lawyers say the payout for customers could dwarf that.
The Federal Court on Thursday sided with the ACCC, ruling Coles’ Down Down campaign had scammed customers with illusory discounts by claiming a product was on sale when it was actually often more expensive than the price just weeks before.
Attention is now turning to customer compensation following the landmark Federal Court ruling with class action lawyers now chasing the supermarket giant to cough up refunds to potentially millions of misled Australian shoppers.
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Class action firm GMP Law will argue the company should be forced to go into its Coles FlyBuys loyalty program to find exactly how many customers shopped with them between February 20 to February 22 and May 20 to May 23.
Coles would then be required to determine what products customers bought under the misleading Down Down sale and how much they were over-charged.
There are 10 million customers on FlyBuys and if every one of them were to get a refund, the pay-out could be in the tens of millions.
Coles could be facing a class action following the Federal Court ruling. Credit: AAP
Greg Mackey, Special Counsel at GMP Law, said the case could make history.
“I haven’t found one anywhere in the world, certainly not in Australia,” he said.
“Millions of consumers and tens of thousands, maybe hundreds of thousands of transactions.
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“That adds up to a lot of money.”
The final decision on how much customers could be paid back is in the hands now of the Federal Court judge but the process could take 12 to 18 months.
As it happened — Coles loses its Federal Court case
Coles faces penalties in the hundreds of millions of dollars after a court ruled it misled shoppers with illusory discounts.
Federal Court judge Michael O’Bryan delivered his ruling in the landmark case on Thursday morning, brought by the consumer watchdog, finding Coles deliberately disguised price hikes as discounts under its “Down Down” price campaign.
“Thirteen of 14 ‘Down Down’ tickets that were the subject of consideration in the joint liability trial were misleading because the relevant products were not sold at the ‘was’ price stated on the ticket for a reasonable period,” Justice O’Bryan said.
“As a consequence, the discount represented on the tickets was not genuine.”
The decision could mean the $28 billion company is hit with significant penalties, which will be the subject of argument by the parties.
A shopper pushes a trolley outside a Coles supermarket in Sydney. Credit: Ian Waldie/Bloomberg
The penalties could technically attach to every time a contravening product was advertised, Melbourne University consumer law expert Jeannie Paterson said.
“The penalties could be colossal, absolutely colossal, because it’s per contravention,” she told AAP.
Professor Paterson said rather than impose a meaninglessly large penalty, the court will look at Coles’ culpability, the steps it took to mitigate harm and the period of time over which the breaches occurred.
The Australian Competition and Consumer Commission brought separate but similar cases against the country’s two dominant supermarket chains with a Woolworths suit awaiting judgment at a later date.
Both cases alleged the supermarkets misled consumers by increasing prices for a short time before lowering them to above the original price and marketing it as a discount.
Justice O’Bryan noted that until March 2022, Coles’ own internal policies stipulated a product could not be sold under the “Down Down” promotion unless it had been sold at the previous price for a minimum period of 12 weeks.
He said Coles relaxed its policy under perceived pressure from its closest competitor Woolworths.
In Thursday’s ruling, Justice O’Bryan found if the products were sold at the higher price for 12 weeks before being marketed as a discount, it would not have been misleading.
“The vast majority of ordinary consumers, when shopping would not have formed any conscious belief about the period for which the product had been offered for sale by Coles ... beyond an intuitive sense the discount being promoted was genuine and not artificial,” he said.
Justice O’Bryan also ruled one of the products sold under the ‘Down Down’ campaign, a can of Nature’s Gift dog food, was not misleading because it did not include a “was” price on the ticket.
One of the examples of a product offer found to be misleading was a jar of Coles-brand quince paste that was raised to $4.50 from $3 for four weeks, before being reduced to $3.15.
A general view of Coles at Carlingford Court in Sydney, Tuesday, August 26, 2025. (AAP Image/Steven Markham) NO ARCHIVING Credit: STEVEN MARKHAM/AAPIMAGE
The watchdog identified hundreds of products on the Coles campaign and a similar “Prices Dropped” push from Woolworths that followed a similar formula.
During separate hearings, lawyers for the supermarkets argued prices increased due to inflationary pressures and the discounts were genuine.
Coles’ barrister John Sheahan argued “ordinary, reasonable consumers” knew that prices generally trended upward due to inflation.
“We acknowledge today’s Federal Court decision in relation to the ACCC proceedings,” a Coles spokesperson said in a statement issued to 7NEWS.
“Our priority has always been – and will continue to be – delivering value to our customers.”
“The Court found that all price increases resulted from supplier cost price increases and were, therefore, commercially justifiable... We are in the process of reviewing the judgment.”
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