It is telling that both our supermarket giants have decided to push back in court against allegations from the consumer regulator that they misled their customers with faux price discounts.
The Australian Competition and Consumer Commission has been on a mission to hold the big supermarkets to account and stands ready to act when new price-gouging laws come into force this year. The laws follow the consumer watchdogโs inquiry into the grocery giants last year, which failed to come up with any findings on excessive pricing.
Now, the ACCCโs credentials will be tested by its court cases against Woolworths and Coles targeting the two supermarket groups and their treatment of customers.
This court battle is about more than the prices of Tim Tams, Coke and dog food. For the ACCC, this legal action is a big swing that will test supermarketsโ price curation methods, their marketing mechanics and profit margin management across the thousands of items they stock.
But the near-identical cases defended earlier this year by Coles and now by Woolworths are proving tricky for the ACCC to navigate. If the critical questioning and interjections by Justice Michael OโBryan are any guides, the regulator is finding it tough to prove its point.
Legally, supermarkets are allowed to charge whatever price they like for a packet of, letโs say, Oreos โ but they are not allowed to mislead customers on whether that price is discounted.
The barrister representing the ACCC, Michael Hodge KC, insists that when customers see a โprices downโ ticket on a product, they assume it is a discounted or special price. Justice OโBryan wondered whether shoppers would โintellectualiseโ much about the history of the price tag as they are racing down the aisles. He confessed to being โtroubled by the way the ACCC was putting their caseโ.
The case goes to the heart of whether, as shoppers, we are being misled, or whether we just accept that supermarket product prices change.
The ACCC is claiming that in 2021 and 2022, in the inflationary aftermath of the pandemic, the supermarkets raised the prices on a bunch of products for just a couple of weeks or months to create the illusion of a new price point, which they then used to apply what the regulator claims was a fake discount.
In many instances, the new discounted price was higher than the original price. (These facts are not in contention.)
The ACCC has brandished a series of examples, in which prices had been engineered up and then down. The issue is how long a certain price must be used before it becomes an โestablished priceโ.
If a price rise is applied to a product for a short time before it is then discounted, is the discount genuine?
This is part of the turgid debate between the two parties.
Meanwhile, the legal proceedings are covering a time in which inflation was rampant, and the spike in prices on some items was the result of supermarket suppliers raising their prices. They also cover a period when there was rising pressure on the supermarkets to deal fairly with suppliers.
While a lot is riding on the outcome of the court cases for the ACCCโs reputation, it could be argued that even mounting this case will land the regulator a win of sorts.
Win or lose, the community will be aware that the consumer watchdog has a beef with the supermarkets and customers could take away that prices are excessive, or that theyโre being duped.
The court cases and their publicity will arguably alter the discounting habits of the supermarkets by encouraging them to revisit their internal guidelines.
For example, is raising a shelf price for four weeks enough to establish a new price base from which to apply a discount?
I wonder when Justice OโBryan or ACCC barrister Hodge last cruised the supermarket aisles on a regular basis to chase sale items.
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