Coles was also ordered to display a Federal Court notice in its stores and on its website telling shoppers that it had broken Australian consumer law by falsely advertising bread products as "freshly baked" and "baked today".
Federal Court judge James Allsop made the ruling on Monday after Coles was found guilty in June for making false, misleading and deceptive representations in relation to the freshness of its bread.
Coles has been banned from promoting its bread as baked on the day it is being sold or made from fresh dough for three years.
It must tell consumers of the ban and that it had been found to have made the false, misleading and deceptive representations by advertising bread as fresh when it had been made and partially baked and then frozen, sometimes months earlier overseas.
The court is yet to make a decision on whether to fine Coles, which faces penalties of more than $3 million.
The case was brought by the Australian Competition and Consumer Commission after former Victorian premier Jeff Kennett complained when he discovered a loaf of Coles bread that was advertised as freshly baked in-store had been made in Ireland.
