Updated ,first published
The Australian Competition and Consumer Commission’s case that Coles misled customers with its “Down Down” promotions has faced a wall of critical questioning, with the judge hearing the case interrogating whether it has failed to prove its central allegation.
On Wednesday, Justice Michael O’Bryan probed the commission’s claims that customers had been duped into thinking prices marked as “Down Down” represented a good deal, and were being offered for less than what the associated items were selling for weeks earlier.
The judge said the commission had not formally argued the tickets conveyed those meanings as part of its case, or proved them to be misleading. “If they are the two primary representations communicated by the [pricing] ticket … doesn’t the commission’s case have to fail?” O’Bryan asked.
The ACCC is seeking to prove that Coles’ discounts were misleading by arguing the supermarket giant raised prices on a sample of everyday items ahead of its promotions, so it could then cut them to higher-than-original prices and falsely claim to have put the products on special.
Coles is fighting the claim, arguing price rises were caused by supplier pressure, inflation and market forces, and subsequent discounts offered genuine savings. However, the company’s defence and witness statements of former and current staff last week prompted intense scrutiny of its legal position amid admissions of errors, and concessions that discounts had been orchestrated ahead of time.
This week’s hearing exposed potential holes in the consumer watchdog’s case.
Outlining the ACCC’s closing submissions, its lead barrister, Garry Rich, SC, urged O’Bryan to find that Coles misled consumers on multiple occasions by promoting its products as “Down Down” from a previous price when he argued they had, in fact, become more costly.
“That representation was misleading because the ‘was’ price … was not the regular price of the product,” Rich said. “Instead, it was a price that had only applied for a short period – too short, in our submission, to become the regular price of the product.”
‘Doesn’t the commission’s case have to fail?’
Federal Court Justice Michael O’Bryan
Rich relayed the argument the ACCC has relied upon throughout the case, pointing to three price levels for products: their first, or regular price; their second or “establishing” price at a new higher amount; and then their third “Down Down” price.
Rich said the case hinges on two key questions: “What representation did the ‘Down Down’ tickets convey to their intended audience?” and “was that representation misleading or deceptive?”
He said that while many of Coles’ customers “are well-educated and commercially astute … many are not”. Most of them want to spend “as little time shopping for groceries as possible”, he said. “It is a chore.”
Customers “see a big red-and-white ticket. They read that the price is ‘Down Down’. They read that the price was much higher. They think they’re being offered a good deal. The price has gone down, they’re told. They think it’s a genuine discount. Many will have no idea that the price was actually lower four weeks ago,” he said.
At this point, O’Bryan interrupted Rich, warning that the commission’s arguments about a consumer’s thoughts of getting a good deal and their interpretation of “Down Down” were not formally put by the ACCC as part of its case.
As Rich appeared to be relying on these arguments, O’Bryan broke in with his critical interjection: “Doesn’t the Commission’s case have to fail?” the judge asked.
“I’m just warming up,” Rich replied.
O’Bryan also questioned why the commission was emphasising the fact that Coles had sold some products at one price for long periods before being briefly raising them ahead of a discount.
On Wednesday afternoon, Coles’ lead barrister John Sheahan, KC, said shoppers would understand that when the supermarket raised prices, that was often because of inflation.
“However long it had been in place, a discount would be both real and welcome,” Sheahan said.
He said the ACCC’s case “must fail” because Coles’ prices were genuine, even if they were not available for long, and therefore its discounts were real too.
The hearing continues.
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.
