A second Coles manager has been grilled in the federal court over whether rushing a product onto a “Down Down” promotion could have broken internal guidelines.
It follows yesterday’s revelations from a former manager that “human error” led to the company putting Arnott’s Shapes on a “Down Down” promotion faster than what was allowed.
The Australian Competition and Consumer Commission (ACCC) is suing Coles over what it claims was a “planned” campaign to mislead customers with fake or “illusory” discounts on hundreds of common household items.
It alleges the supermarket giant jacked up prices briefly before dropping them to a higher-than-original price and including the items in the “Down Down” promotion.
The ACCC is alleging Coles was jacking up prices of several products before placing them on a “Down Down” promotion.
ACCC legal counsel Garry Rich cross-examined Paul Carroll for several hours about his time in charge of Coles’s pet food range.
Mr Rich probed the supermarket’s pricing of a dog food product, Nature’s Gift 1.2 kg Adult Wet Dog Food Loaf.
In its opening address on Monday, the ACCC used it as an example of how shoppers were being misled.
Nature’s Gift Adult Breed Dog Food has been the focus of the case again on Thursday. (ABC News: Patrick Stone)
For almost 300 days until February 2023, shoppers were paying $4 for the product on a “Down Down” promotion.
Then, the supermarket increased the price to $6 for just seven days.
After that, it was put back on the “Down Down” promotion for 12 months at $4.50 — 50 cents more than it had been only a week earlier.
The supermarket increased the price by 50 per cent to $6 for seven days before placing it on the promotion at $4.50. (ABC News: Michelle McNamara)
Push to be more competitive
Mr Carroll told the court he was concerned the price increase to $6 made Coles uncompetitive compared to arch rival Woolworths and sought advice from the head of pricing and value.
At that time, the product had only been on the white ticket for $6 for two days.
“And you understood at the time, didn’t you, that Coles’ promotional guardrails prevented you from putting the product back on the ‘Down Down’ program unless the white ticket price had been established for at least four weeks?” Mr Rich asked.
“I understood that, yes.”
“We were encouraged to, in instances … if we saw competitors at a lower price, check in with the pricing team on what permissions were allowed to move faster to be more competitive,” he told the court.
“Is the answer … that you wanted to move earlier to a ‘Down Down’ price than you understood the guardrails permitted?” Mr Rich asked.
“Yes.”
Legal counsel for the ACCC, Garry Rich (right), cross-examined Paul Carroll about his time in charge of Coles’s pet food range. (AAP: Jay Kogler)
The ACCC has claimed Coles changed its internal guidelines for the “Down Down” discount program to allow it to move faster to discount products, motivated by what its key rival Woolworths was doing.
The court has heard evidence about how the “Down Down” program drove higher sales for many products and that negotiations with suppliers about going onto the promotional program could also result in Coles achieving a higher profit margin.
‘Not in the spirit’ of promotion
An email exchange Mr Carroll had with a colleague was also discussed, where he was told a product must be sold at the higher price for four weeks to “price establish” before it could be sold at a lower “Down Down” price.
While that was allowed “compliance-wise”, it was “not in the spirit of what DD [Down Down]” was, the email said.
Mr Rich asked Mr Carroll, “You understood him to be telling you, didn’t you, that it wouldn’t be fair dinkum to tell customers the price was ‘Down Down’ when only four weeks earlier the price was lower?”
“He’s referring to a different product in question, Mr Rich,” Mr Carroll replied.
“Well, the prices are different but it’s the same idea, isn’t it? He’s referring to one of the four products in the table that you provided him, correct?”
He agreed.
Do you have a story about a company misleading consumers? Email specialist.team@abc.net.au
Mr Carroll told the court he was managing two areas at the same time and may have missed some detail regarding when to place the product on promotion.
Coles is defending the case, arguing 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.
The supermarket giant is also arguing the consumer watchdog failed to establish what a regular price should be and how long it should be offered for.
The case continues tomorrow.