Australian supermarket giant Coles Group has been found to have misled shoppers with fake discount promotions, according to a landmark ruling by Australia’s Federal Court, a decision that could result in substantial financial penalties.
The case was brought by the Australian Competition and Consumer Commission (ACCC), which alleged that Coles’ “Down Down” discount campaigns on hundreds of everyday products were not genuine savings. Regulators argued that the supermarket had temporarily increased prices before advertising reductions, creating misleading impressions of discounts.
On Thursday, Justice Michael O’Bryan ruled that the promotions were “not genuine discounts” for most of the products examined. The judge is also overseeing a similar case against rival retailer Woolworths Group.
The court examined 245 products ranging from toothpaste to biscuits sold between February 2022 and May 2023. In a sample of 14 products reviewed during the proceedings, 13 were found not to represent real price reductions that would be understood as genuine savings by ordinary consumers.
Justice O’Bryan said that for a discount to be considered legitimate, the product must have been sold at the higher “was” price for at least 12 weeks prior to the promotion. Without this condition, the court found that the advertised savings could mislead customers.
One exception was a promotion for Nature’s Gift Dog Food, which the court ruled was not misleading because it did not display a “was” price, avoiding the implication of a prior higher cost.
Coles rejected allegations of wrongdoing but said it was reviewing the judgment. The company stated that its priority had always been to provide value to customers and emphasised the need for clearer industry guidelines on pricing practices.
The ACCC has separately filed a similar lawsuit against Woolworths, accusing the rival chain of misleading pricing across 266 products over a 20-month period. A final ruling in that case is expected later this year.
Both Coles and Woolworths dominate Australia’s supermarket sector, together accounting for around two-thirds of the market. In recent years, they have faced increasing scrutiny over alleged price manipulation and anti-competitive practices amid rising cost-of-living pressures.
Any financial penalties for Coles will be determined in upcoming hearings, and are expected to be significant given the scale of the violations identified by the court.