In brief
- Coles has been found to have misled consumers over the pricing of its "Down Down" products.
- The consumer watchdog had accused the supermarket of creating artificial discounts.
Coles has been found to have deliberately misled customers with its "Down Down" in-store promotions in a major legal blow.
Justice Michael O'Bryan delivered the Federal Court judgment on Thursday morning, saying that the supermarket giant had made a "misleading representation".
"I have concluded that 13 of the 14 Down Down tickets that were the subject of consideration in the joint liability trial were misleading," the judge said.
"The relevant products were not sold at the 'was' price stated on the ticket for a reasonable period, and, as a consequence, the discount represented on the tickets was not genuine."
"In offering the sample products on those Down Down tickets, Coles engaged in conduct in trade or commerce that was misleading."
The case was brought to the court by the Australian Competition and Consumer Commission (ACCC) and is similar to another case it has brought against Australia's other major supermarket chain, Woolworths.
The supermarket rival has similarly been accused of displaying false or misleadingly described sale prices for products in its store.
Both cases allege that the retailers misled consumers by increasing prices on their products for a short time before lowering them to above their original price and marketing that as a genuine discount.
In one instance, a can of Nature's Gift dog food was on sale for $4 nearly a year before the price was briefly increased to $6.
It was then sold under a "Down Down" ticket for $4.50.
That product was not, however, found to have been misleading, as it did not include a "was" price on its pricing ticket.
The watchdog identified hundreds of products from the Coles campaign and a similar "Prices Dropped" push from Woolworths that followed a similar formula.
Further action still to come
During separate hearings, lawyers for the supermarkets argued prices increased due to inflationary pressures and the discounts were genuine.
The judge agreed with some of Coles' defence, saying that temporary price increases had been made by the supermarket as a direct result of supplier cost increases and that the company "increased the price in a commercially justifiable manner".
ACCC barrister Garry Rich argued during hearings that Coles was trying to avoid losing customers by disguising price increases as discounts.
"Why on earth are you telling your customers your prices are going down? They're not," he told the court.
But Coles' barrister John Sheahan argued "ordinary, reasonable consumers" knew that prices generally trended upward due to inflation.
The judgment could lead to significant penalties for the supermarket giant, which is worth an estimated $28 billion.
O'Bryan has said that further case management will take place on 10 June, following consultation with both parties.
SBS News has contacted Coles for comment.
— With additional reporting by the Australian Associated Press.
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