Woolworths is defending itself after being accused of using fake discounts on essential and popular grocery items to deceive consumers.
The ACCC has accused Australia’s biggest supermarket Woolworths of breaching the Australian Consumer Law by misleading consumers through discount pricing claims on hundreds of common supermarket products.
In his opening remarks to presiding Justice Michael O’Bryan on Tuesday, Woolworths’ barrister Robert Yezerski SC said their case would address the economic context, particularly inflation hikes, at the time of the alleged conduct.
“(The ACCC case) ignores the reality that the relevant period was characterised by very high and pronounced inflation,” he said.
Mr Yezerski said consumers at the time “expected” grocery prices to rise.
“Wherever the ordinary and reasonable consumer shops, they are seeing prices go up at this period and going up consistently across Coles and Woolworths and Aldi.”
He claimed Woolworths could prove allegations they increased prices to solely facilitate a perceived discount were false.
“The true commercial context was one in which Woolworths was facing significant cost price increases (from suppliers),” he said.
“This analysis of reasonable period of time (for price changes) is just wrong, it’s just misguided from the Commission.”
The consumer watchdog claims Woolworths falsely or deceptively represented prices of 266 products between September 2021 and May 2023.
Woolworths is accused of implementing short-term price rises of at least 15 per cent on products that had been on shelves at stable prices for at least six months.
The supermarket is then accused of placing the products on a Prices Dropped promotion at a lower price; however, prices remained higher than, or the same as, the original stable price that applied before the price spike.
“We allege that (Woolworths) … breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory,” ACCC chair Gina Cass-Gottlieb said in a statement released in 2024.
“We also allege that in many cases … (Woolworths) had already planned to later place the products on a ‘Prices Dropped’ … promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price,” Ms Cass-Gottlieb said.
In his opening statement to the court on Tuesday, ACCC counsellor Michael Hodges KC said the Prices Dropped campaign was distinct from other discount campaigns like the supermarket’s yellow sticker Specials program which temporarily reduced prices for consumers.
“The Prices Dropped message is not about ‘buy now’ because the price is temporary … the subtle magic of the Prices Dropped message that draws the consumer in is to say that the new stable price is lower than the old stable price,” he said.
“If consumers were to read the Prices Dropped tickets cynically, as saying no more than the new stable price is lower than a price that existed on a day in the past, then that magic would be lost … the Prices Dropped message would descend to meaninglessness.
“These (Prices Dropped) tickets convey, and are intended to convey, far more than just the few literal words that appear on the ticket.”
Mr Hodges said the case would need to address if consumers would have any “thought in their head” about the timing of the original price, inflated price and Prices Dropped price.
He previewed evidence which he claimed suggested Woolworths relaxed guardrails and guidelines meant to protect the “truthfulness” of the program within the pricing program to expand the program.
Mr Hodges said the alleged conduct occurred when both consumers and Woolworths were battling high economic inflation.
“At a time when (consumers) are facing cost of living pressures they are being told we, Woolworths, have reduced the prices (to) benefit to you,” he said.
“In fact what Woolworths has done is to push up the prices and then, having pushed them up in order to create a new “was” price, drop them back down to a price higher than what was the (original) price.”
Mr Yezerski claimed the ACCC has misinterpreted the policies and erred in their analysis, arguing the policies showed Woolworths took “seriously ACCC guidelines”.
Among the impacted products were Oreo cookies, Arnott’s Tim Tam biscuits, Dolmio sauces, Doritos salsa, Energizer batteries, Friskies cat food, Kellogg’s cereal, President butter, Listerine mouthwash, Moccona coffee capsules, Mother energy drinks, Mr Chen’s noodles, Nicorette patches, Ocean Blue smoked salmon, Palmolive dishwashing liquid, Raid insect spray, Sprite soft drink, Stayfree pads, Twisties, Uncle Tobys muesli bars, and Vicks VapoDrops.
In an example case, the ACCC alleged Woolworths sold The Oreo Family Pack at $3.50 for 696 days until late November 2022.
The price then rose to $5.00 for 22 days before Woolworths put it on a Prices Dropped price of $4.50.
A Price Dropped sticker was shown to consumers stating the price “was” $5 but was now $4.50.
Mr Yezerski claimed the Oreo price hike coincided with peak inflation pressures on the industry.
Speaking when the case was launched, a Woolworths spokesperson said: “Our Prices Dropped program was introduced to provide our customers with great everyday value on their favourite products.”
The case beginning in the Federal Court in Sydney on Tuesday is near identical to one brought against Coles earlier this year that is awaiting judgment in the Federal Court.
Woolworths is Australia’s biggest supermarket chain, with about 1140 stores across the country.
The case is expected to run for the next two weeks.
