Coles has downplayed what shoppers understood when they saw its “Down Down” price tags and advertising, saying “not much”, on the second day of a bombshell federal court case.
The Australian Competition and Consumer Commission (ACCC) is suing Coles in a lawsuit described as “the case of the century” by a former ACCC boss.Â
Yesterday, the ACCC accused Coles of a “planned” campaign to mislead customers with fake or “illusory” discounts on hundreds of common household items from dog food to yoghurt and bottles of Coke.
The consumer watchdog claims the supermarket giant jacked up prices for a short time before cutting them and including items in the “Down Down” promotion.
The consumer watchdog claims the supermarket increased prices for a short time before placing them on the promotion. (Four Corners)
It claims the “Down Down” price was actually more than, or the same as, the regular price.
In evidence this morning the judge overseeing the case, Justice Michael O’Bryan, asked Coles to explain what it was telling customers with its prominent marketing campaign, featuring giant red hands pointing down.
“It’s really asking a bigger question about what ordinary consumers understand about the Down Down program,” Justice O’Bryan said.
“I don’t know if I’ve seen a statement from Coles which directly answers that question.”
In response, legal counsel for Coles John Sheahan KC said: “In terms of what consumers would take from the advertising campaigns and the red hand — not much.”
“It’s an indication that Coles is trying to keep prices low,” he said.
Justice O’Bryan probed further, asking if Coles would accept that “Down Down” was a promotion and showed a discount.
“Yes,” Mr Sheahan responded.
Do you have a story about a company misleading consumers? Email specialist.team@abc.net.au
‘ACCC case too complicated’: Coles
During today’s proceedings, Coles began hitting back and pointing out what it saw as serious flaws in the consumer watchdog’s case.
It spent much of the morning explaining the complex way in which it set and negotiated prices with suppliers and how it agreed to “Down Down” pricing.
This required detailed planning and forecasting as well as assessing whether a supplier could deliver the large quantities needed for a promotional discount, as it resulted in a steep increase in sales.
Coles has also argued that the ACCC has failed to establish what a regular price should be and how long it should be offered for. Â (ABC News: Billy Cooper)
Mr Sheahan said the ACCC case was too complicated because it relied on an assumption that the average shopper understood the many factors that went into deciding a price while they were browsing the aisles.
“It’s too complex to credibly attribute to an ordinary, reasonable consumer walking down the aisle at Coles,” he said.
“What they would be concerned [about] when they’re walking down the aisle … is whether the claimed discount was, to use of the expression yesterday ‘fair dinkum.'”
Several grocery items, in particular a can of dog food, have been in the spotlight for having alleged fake or “illusory” discounts. (ABC News: Patrick Stone )
Yesterday, the ACCC used three prices Coles charged for a tin of dog food to illustrate what it claimed was the misleading conduct.
For a period of almost 300 days between April 2022 and February 2023, Coles offered a 1.2 kilogram loaf of Nature’s Gift Wet Dog Food for $4, ACCC legal counsel Garry Rich told the court.
Then for seven days the price rose by 50 per cent to $6.
On the eighth day the price was set at $4.50 — 13 per cent more than customers had been paying for all but seven of the previous 303 days — with Coles labelling the product “Down Down”.
Coles promotions slammed in court
Mr Rich said while that statement was “literally true” it was also “utterly misleading”.
“It did not disclose that a reasonable consumer would not have understood that Coles had increased the price to $6 for just seven days, immediately before the promotion, and that for 296 days before that, the price was $4,” he said.
That line of argument was criticised by Coles.
“In the end, all prices are temporary. Nothing lasts forever,” Mr Sheahan said.
On Monday, Coles said customers would have been aware they were shopping in an environment of “sudden materially increasing prices”. (ABC News: Billy Cooper)
He said both sides accepted that the pricing tickets customers were shown in store were “literally correct”.
Mr Sheahan repeated Coles’s defence that it also reflected a genuine discount.
If Coles added background information about the price history to the ticket it would be too difficult to understand, he said.
Here’s what’s at stake when the ACCC takes Coles to court
He added that for most of the 245 items the case was examining, Coles had not increased the price for a very short period.
With a few minor exceptions, the products were sold at the higher price for four to six weeks and a substantial volume was sold.
Coles also argued that the consumer watchdog had failed to establish what a regular price should be and how long it should be offered for.
The case continues over the next fortnight.