A race to the bottom in consumer law compliance
In a Melbourne courtroom, a federal judge has found that Coles — one of Australia's most familiar institutions of daily life — systematically deceived its own customers through the quiet choreography of artificial price inflation and illusory discounts. The ruling, which touches on the ancient tension between commerce and trust, establishes that a price must genuinely exist for at least twelve weeks before it can be held up as a benchmark for savings. What is at stake is not merely a fine, but the integrity of the social contract between retailer and shopper — the assumption that a bargain is real.
- Coles raised prices briefly and artificially, then advertised reductions to levels still at or above the original, deceiving shoppers who had no way of knowing the 'was' price had existed for as little as 28 days.
- The court found deception on 13 of 14 examined pricing tickets, with Coles executives admitting under cross-examination that the entire price sequence — rise, then 'discount' — was planned in advance with suppliers.
- Coles had introduced its own internal safeguards as early as 2019, but deliberately wound them back in March 2022 under competitive pressure from Woolworths, triggering what the judge called a 'race to the bottom' in compliance.
- A new legal precedent now requires a minimum twelve-week price establishment period before a discount can be legitimately advertised, fundamentally changing how supermarkets may structure promotional pricing.
- Penalties have not yet been set, but the ACCC is pursuing a fine substantial enough to function as a genuine deterrent rather than an acceptable cost of doing business.
- A parallel case against Woolworths, heard weeks earlier, awaits judgment — and its outcome could reshape promotional pricing compliance across the entire Australian supermarket industry.
On Thursday, Justice Michael O'Bryan delivered a verdict in a Melbourne courtroom that will leave a lasting mark on how Australia's supermarkets advertise their prices. The federal court found that Coles, the nation's second-largest grocery chain, had misled shoppers through its 'Down Down' discount campaign, breaching Australian consumer law in a ruling the ACCC had pursued against both Coles and Woolworths.
The deception followed a consistent pattern. Coles would hold a product at a stable price for roughly a year, then raise it sharply for an average of just 28 days, then lower it again — but not to where it had started. The new 'discounted' price was equal to or higher than the original, yet shelf tickets displayed a 'was' price alongside a lower 'is' price, with no indication of how briefly the 'was' price had actually been in effect. The court examined twelve sample products — including Rexona deodorant, Arnott's Shapes, and Karicare baby formula — and found misleading conduct on thirteen of fourteen pricing tickets reviewed.
Damaging admissions emerged during cross-examination: Coles executives acknowledged that by the time a product's price was raised to the 'was' level, the subsequent 'Down Down' price had already been agreed upon with suppliers. The entire sequence was planned before the first price increase reached the shelf. Coles argued the increases reflected genuine wholesale cost pressures during a period of high inflation, and O'Bryan acknowledged the company had acted in an ordinary commercial way — but found the promotional tickets deceptive regardless. An average shopper, had they known the 'was' price existed for only weeks, would not have believed the discount was real.
The judgment sets a new industry standard: a product must be sold at a higher price for at least twelve weeks before a discount can be advertised without risking a finding of misleading conduct. O'Bryan also traced how Coles had undermined its own safeguards — introducing guardrails in 2019, tightening them in early 2022, then quietly relaxing them just weeks later in response to competitive pressure from Woolworths. He described the result as a 'race to the bottom' in consumer law compliance.
The penalty remains to be determined in later hearings. ACCC chair Gina Cass-Gottlieb has signalled the regulator will seek a fine substantial enough to serve as a genuine deterrent. Meanwhile, O'Bryan's ruling on the parallel Woolworths trial — heard in late April and early May — is still to come, and its outcome may define the future of promotional pricing across the entire sector.
Justice Michael O'Bryan sat in a Melbourne courtroom on Thursday and delivered a verdict that will reshape how Australia's supermarkets can advertise their prices. Coles, the nation's second-largest grocery chain, had misled shoppers with its "Down Down" discount campaign, the federal court found. The supermarket had engaged in conduct that breached Australian consumer law—a landmark ruling that cuts to the heart of how retailers use promotional pricing to move goods.
The Australian Competition and Consumer Commission had taken both Coles and Woolworths to court, arguing that between 2021 and 2023, the supermarket giants had duped shoppers with a pricing sleight of hand. The tactic was straightforward in its deception: Coles would sell a product at one price for roughly a year. Then it would raise that price sharply for just 28 days on average. Then it would lower the price again—but not back to where it started. The new "discounted" price was either equal to or higher than the original. Yet on the shelf, the product wore a "Down Down" ticket showing the supposedly reduced "is" price next to a higher "was" price, with no mention that the "was" price had existed for only a brief window.
The court examined twelve sample products in granular detail: Rexona deodorant, Arnott's Shapes crackers, two-litre Coca-Cola bottles, Karicare baby formula. Fourteen pricing tickets were scrutinized. O'Bryan found that Coles had misled shoppers on thirteen of those fourteen tickets. The supermarket's own executives conceded during cross-examination that by the time they raised a product's price to the "was" level, they had already planned with suppliers what the new "Down Down" price would be. In other words, the entire sequence was choreographed before the first price increase hit the shelf.
Coles argued that the price increases reflected genuine wholesale cost rises from suppliers during a period of high inflation, and that the subsequent discounts were real savings offered to customers. O'Bryan acknowledged that Coles had acted in an "ordinary commercial way" and had been responding to supplier requests. But he found that the promotional tickets were nonetheless deceptive. If an average shopper had known how briefly the "was" price had actually been in effect, they would not have believed the discount was genuine.
The judgment establishes a new industry standard: a product must be sold at a raised price for a minimum of twelve weeks before it can be advertised as discounted without crossing into misleading conduct. This precedent will likely govern supermarket pricing across Australia going forward. O'Bryan's reasoning traced the path that led Coles to this violation. The company had introduced guardrails in 2019 to prevent manipulation of the "Down Down" program—rules that originally required a nine-month gap before a product could return to promotion after a cost-driven removal. In January 2022, Coles tightened these guardrails, imposing a twelve-week "price establishment period." But in March 2022, the company wound them back again, reducing that period to just four weeks. O'Bryan found that Coles had relaxed its own safeguards in response to competitive pressure from Woolworths, creating what he described as a "race to the bottom" in consumer law compliance.
The ruling is a significant blow to Coles, though the full financial consequence remains uncertain. The court has not yet determined the size of the penalty, which will be decided in later hearings. Gina Cass-Gottlieb, the chair of the ACCC, said the regulator would pursue a "substantial" fine—one large enough that it cannot be dismissed as merely a cost of doing business, but rather serves as a genuine deterrent. O'Bryan's decision in the Coles case comes before his ruling in a parallel trial against Woolworths, heard in late April and early May, which he will deliver later this year. That verdict could reshape the entire supermarket industry's approach to promotional pricing.
Citas Notables
If the average shopper had known the 'was' prices had been in place for such a short amount of time, they would not have thought the discounts were genuine.— Justice Michael O'Bryan
It is very important that a penalty is not just able to be dismissed as a cost of doing business, and that it becomes at a level that is a significant deterrent for such conduct.— ACCC chair Gina Cass-Gottlieb
La Conversación del Hearth Otra perspectiva de la historia
So Coles was raising prices and then calling the reduction a discount, even though the final price was higher than it started?
Exactly. They'd sell something at price A for about a year. Then raise it to price B for roughly a month. Then drop it to price C—which was the same as or higher than price A—and call that a "Down Down" discount. The ticket showed the drop from B to C, but never mentioned that B had only existed briefly.
And the court said this was deceptive because shoppers didn't know how short that middle period was?
Right. The judge reasoned that if you saw a ticket showing a discount from a "was" price, you'd naturally assume that "was" price had been the normal price for a reasonable stretch of time. If you'd known it was only there for weeks, you wouldn't have thought the discount was real.
What's the twelve-week thing about?
That's the precedent O'Bryan set. He said if Coles had kept products at the raised price for at least twelve weeks before advertising the discount, the tickets wouldn't have been misleading. It's now the legal standard for the industry.
Did Coles deliberately loosen its own rules to do this?
Yes. They had internal guardrails meant to prevent this exact manipulation. In January 2022 they tightened them to require twelve weeks at the higher price. But two months later, they loosened them back to four weeks. The judge found this was driven by competition with Woolworths.
So what happens now?
Coles faces a substantial penalty, though the amount hasn't been set yet. And there's a similar case against Woolworths that the judge will rule on later this year. This verdict will likely set the standard for how both companies—and the whole industry—can advertise prices going forward.