Woolworths has rejected accusations from the corporate watchdog that it misled consumers with artificial discounts. The supermarket chain argues that the regulator misrepresents the factors influencing shelf prices.
Court Defense Highlights Inflation Pressures
In Federal Court proceedings, Woolworths denied temporarily raising prices on hundreds of products before applying smaller reductions to conceal overall increases. Legal representatives emphasized that these adjustments occurred amid post-COVID inflation, sometimes below supplier recommendations.
‘Woolworths was facing significant cost price increases from a large number of suppliers across their full range of products,’ stated Robert Yezerski SC. ‘To suggest Woolworths is engaged in an activity that is involved for them manufacturing prices to then show a drop, we say, just totally misrepresents the true nature of the commercial negotiation.’
The defense noted that inflationary pressures, which disproportionately affected groceries between late 2021 and mid-2023, were consistent across competitors including Coles and Aldi.
Justice Focuses on Duration of Price Hikes
Justice Michael O’Bryan highlighted that the length of temporary price elevations will be crucial. ‘One tends to think if the price establishment period was three months, we wouldn’t be here,’ he remarked. ‘If it was always one week, the case might not be fought. We’re somewhere in between, and that’s what makes this case rather difficult.’
ACCC Alleges Misleading Tactics
The Australian Competition and Consumer Commission (ACCC) claims Woolworths and Coles employed deceptive practices by briefly inflating prices before lowering them to simulate bargains. Often, these ‘reduced’ prices matched or exceeded prior levels, misleading shoppers.
‘The subtle magic of the ‘prices dropped’ message that draws the consumer in is to say that the new stable price is lower than the old stable price,’ ACCC counsel Michael Hodge told the court.
The ACCC initiated action in 2024 against both chains for violating consumer laws through these promotions. Woolworths discontinued the campaign following the lawsuit. Coles presented its defense in February, with judgment pending after both cases conclude.
Scope of Allegations
The claims involve 266 Woolworths products over 20 months, affecting tens of millions of sales alongside Coles transactions. Court scrutiny narrowed to 12 items, such as family packs of Tim Tams biscuits, Carman’s classic fruit and nut muesli bars, and Sakata rice crackers.
No collusion or anti-competitive behavior is alleged.
Woolworths Statement on Value Efforts
A Woolworths spokesperson affirmed the company never misled customers. ‘Following COVID, there was a period of extraordinary inflation, and we were acutely aware that customers expected Woolworths to provide value wherever possible,’ the statement read. ‘Inflation also put pressure on our suppliers’ costs, and we worked with them to reduce the inflationary impact on customers through our ‘prices dropped’ program.’
Australia’s supermarket industry faces ongoing inquiries amid post-pandemic profit margins, recognized among the world’s highest.
The hearing continues Wednesday as part of an eight-session schedule.
