Australia's second largest supermarket chain, Coles, will have to wait months before learning what penalties will be imposed for sham discounting, a court has been told. Federal Court judge Michael O'Bryan last month ruled that Coles had misled shoppers with discounts on common household items under its 'Down Down' promotional campaign.
The supermarket giant was taken to court by the Australian Competition and Consumer Commission (ACCC) over price fluctuations on 245 products between February 2022 and May 2023. The consumer watchdog alleged that Coles sought to disguise price increases during a period of high inflation by temporarily spiking prices before offering a new 'now' price as a discount. These were advertised in stores with big red stickers, often displaying a 'was' and 'now' price.
The case returned before the Federal Court on Wednesday morning to finalise next steps in the ACCC proceeding and a related class action brought on behalf of impacted shoppers. Justice O'Bryan ordered the parties to work together to try and produce an agreed statement of facts relating to the bulk of the 245 products in line with his ruling.
For convenience, during the trial earlier this year, 14 items were selected as a sample range to be argued, with the remainder now set to be decided on or before a hearing in August. A two-day hearing was tentatively scheduled for December 16 for the ACCC and Coles to make submissions on appropriate penalties for the contravention of consumer law. The court was told that the ACCC is seeking both a financial penalty and declaratory relief.
The class action case, which so far has run alongside the ACCC's case, may be heard during the same hearing or separated, the court was told. During the trial, the court was informed that Coles had dropped its own internal policies to sell an item at a new price for 12 weeks before introducing a discount to avoid misleading customers. However, in what was described as a 'race to the bottom' between Coles and competitor Woolworths, at a time when suppliers were raising prices, this period was reduced to four weeks.
Justice O'Bryan found that if Coles had kept the 12-week period in place, the price changes would have been regarded by an ordinary shopper as 'genuine'. The judge determined that Coles' price increases were not 'artificially high' and reflected genuine supplier cost increases. Coles had defended the case by arguing that the price changes were genuine and reflected a period of high inflation, with 'Down Down' discounts representing 'an indication Coles is trying to keep prices low'.
Following the decision, ACCC boss Gina Cass-Gottlieb said the consumer watchdog would be making 'strong submissions' on the penalty to be imposed on Coles. Ms Cass-Gottlieb stated that while the 'level of penalty is a matter for the court to determine', the ACCC would be seeking a 'significant deterrent for such conduct'. 'We will certainly make strong submissions on the level of penalty,' she said.
Justice O'Bryan also made suppression orders over certain figures in his judgment to protect commercially sensitive information for Coles, including costs and funding support provided by suppliers and calculations of gross margins for the supermarket. The case will return to court in August.
