Supermarket giants Woolworths and Coles have blamed supplier-requested price increases amid a “sudden outbreak of high inflation” in response to allegations by the consumer regulator they deceived customers with fake discounts.
Woolworths and Coles appeared in the federal court in Melbourne on Wednesday for the first time since the Australian Competition and Consumer Commission last month launched legal action against the companies for allegedly misleading customers with “illusory” discounts on hundreds of common supermarket products.
The ACCC lodged fresh legal documents shortly before the court appearance detailing the extent of the promotional activity, which allegedly includes scores of items, from marinades to instant noodles, priced more than 30% above their regular price but advertised as discounts.
John Sheahan KC, acting for Coles, told the case management hearing his client would show that price spikes were due to a request by suppliers for a price increase to account for their costs during a period of a “sudden outbreak of high inflation”.
He said the “ultimate discounted price” needed to be considered in light of the product’s real cost increases.
He described the legal proceeding as a “very significant case”.
“It’s significant in terms of it its implications for the whole industry, for the suppliers, for the retailers and the consumers,” he said.
Cameron Moore SC, representing Woolworths, labelled the ACCC’s case “misconceived”.
He said the suggestion in the regulator’s case that the supermarket initiated temporary price spikes was “not correct”.
“Any price increases were initiated by suppliers … in response to rising costs,” he said.
Sarida McLeod, representing the regulator, responded to the supermarket’s responses, telling the court “none of this takes the ACCC by surprise”.
“The conduct is still misleading,” she said.
The ACCC sued the supermarkets last month, alleging they had breached consumer law on hundreds of common supermarket products.
The major retailers are accused of inflating the prices of groceries for a short period, before placing them in their discount promotions.
Justice Michael O’Bryan said he would conduct the case management hearings for the two supermarkets together but each case would be heard separately.
He said another case management hearing would be held at a date to be determined.
The ACCC’s fresh court documents contain details of 276 promotional items at Woolworths and 255 at Coles, which the regulator alleges supermarkets briefly increased prices on before advertising them as discounts.
In one example, Woolworths sold Arnott’s Tim Tams at $4.50 for 617 days, which the regulator refers to as its “regular price”.
The price was increased to $6 for 21 days and then sold in a promotion for $5.50. While shoppers were told they were receiving a discount, the new price tag represented a 22% increase on the regular price, according to the regulator’s analysis.
Woolworths sold Maggi beef noodles in a discount promotion for 30% more than its regular price, according to the ACCC.
Coles sold a range of L’Oréal anti-wrinkle moisturisers for an extended period at $15 according to the court documents, but then increased the prices to $24 for a four-week period.
The supermarket then allegedly put the skincare products in its discount promotions at $18, despite them being 20% more expensive than their regular price.
A MasterFoods marinade stocked by Coles was sold in its promotion for 33% above its regulator price, the regulator alleges.
The alleged consumer breaches cover almost all product categories, with snacks and pantry items, coffee, soft drinks, cosmetics and pet food all included in the ACCC’s list of affected products.
