This Just In: The Federal Court Has Just Ruled Coles' "Down Down" Discounts as Misleading
The Federal Court has ruled Coles misled shoppers through its discount program, finding 13 of 14 sample products were sold misleadingly.
The Federal Court has just ruled that Coles' "Down Down" discount campaign — yes, the one with the jingle — was misleading shoppers, with prices on hundreds of products bumped up briefly before being "discounted" back down to a level still higher than where they had been weeks before.
In a judgment delivered by Justice Michael O'Bryan in Melbourne this morning and reported by the Sydney Morning Herald, the court found that of 14 sample products examined in the case brought by the Australian Competition and Consumer Commission (ACCC), 13 had been sold in a misleading manner. The products at the centre of the case were supermarket staples: 2-litre bottles of Coca-Cola, Colgate toothpaste, 900-gram tins of Karicare baby formula, Rexona deodorant, Lurpak butter and Arnott's Shapes biscuits.
Here's how it worked. Take the example of Nature's Gift wet dog food: priced at $4 between April 2022 and February 2023, the product jumped to $6 for seven days before Coles introduced a new "Down Down" price of $4.50 — advertised as a discount from $6. Shapes biscuits got the same treatment, going from $5 a packet in 2021 to as much as $6.50 before being marked at $5.50 on promotion.
O'Bryan found Coles' price increases were "commercially justifiable" — driven by supplier requests — but said the supermarket needed to have sold the products at the higher "was" price for a full 12 weeks before customers would consider any subsequent discount genuine. Most products were at the higher price for only four. As a result, the judge said, "the discount represented on the tickets was not genuine" and Coles' conduct was "misleading, in contravention of…the Australian Consumer Law."
During hearings earlier this year, the Sydney Morning Herald reported that Coles' manager of health products Matthew Hankin admitted the supermarket had worked with a supplier in March 2022 to lift the price of Colgate toothpaste from $5.50 to $7 for four weeks — specifically so it could then market the toothpaste back down to $6 as a Down Down "special." The ACCC's barrister Garry Rich SC put it more pointedly in court, according to 9News: "Why on earth are you telling your customers your prices are going down? They're not."
Melbourne University consumer law expert Jeannie Paterson told AAP ahead of the ruling that a finding against Coles could mean "colossal" fines and a rethink of how supermarkets promote pricing. Penalties have not yet been handed down. A near-identical ACCC case against Woolworths over its "Prices Dropped" campaign is still awaiting judgment.
The full judgment is available via the Federal Court.
Lead image: iStock
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