Australia’s Watchdog Takes Woolworths and Coles to Court Over Alleged Discount Scams

Australia’s two largest supermarket chains, Woolworths and Coles Group, are facing legal action initiated by the Australian Competition and Consumer Commission (ACCC) over allegations of deceptive pricing tactics. According to Investing.com, the watchdog has accused the retailers of misleading consumers by inflating prices before offering the items as discounted, creating the illusion of price cuts.

Per Investing.com, the ACCC claims that both supermarket giants engaged in this behavior through their respective promotions—Woolworths’ “prices dropped” and Coles’ “down down” campaigns. The watchdog alleges that these promotions misrepresented discounts on a wide range of supermarket items by increasing prices prior to labeling the items as discounted, effectively returning them to pre-inflation rates.

“Each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory,” ACCC Chair Gina Cass-Gottlieb said in a statement. The ACCC’s investigation found these alleged violations involved a variety of everyday products such as chocolates, soft drinks and other common household goods.

Although the exact fines the ACCC is seeking remain unclear, Investing.com notes that the potential penalties could be significant, with the maximum fine for each breach of consumer law set at A$50 million ($34 million).

Coles, in response to the ACCC’s allegations, stated that the claims were made during a period of “significant cost inflation,” as the company faced rising prices from its suppliers. Coles has announced plans to defend itself in the proceedings. Woolworths has acknowledged the lawsuit and said it intends to engage with the ACCC to address the claims.

Both Woolworths and Coles have seen their profits decline in recent years as Australian shoppers have become more price-conscious due to high inflation and rising interest rates, forcing many consumers to cut back on spending. The current legal action could further challenge the financial standing of these retail giants in an already tough market.

Source: Investing.com