The Federal Court has found Coles Supermarkets made false or misleading representations in its ‘Down Down’ promotional program, handing the ACCC a significant win in proceedings that have been closely watched across the retail and manufacturing sectors.
The Court found that Coles made misleading representations in 13 of the 14 ‘Down Down’ tickets examined in the liability hearing. While the Court accepted that all price increases covering 245 products were driven by supplier cost price increases and were commercially justifiable, it found that Coles was required to maintain a minimum price establishment period of 12 weeks after a cost price increase before promoting a product under the Down Down program. Coles did not do so, and the promotional tickets were therefore found to be misleading.
The ACCC’s case centred on products that had been held at a stable long-term price for at least 180 days before being increased by at least 15 per cent for a brief period, then placed on the Down Down promotion at a price that remained higher than, or equal to, the original pre-increase price. The watchdog alleged the discounts were illusory.
ACCC Chair, Gina Cass-Gottlieb, said, “The ACCC brought this case in the public interest because we considered that Coles’ pricing practices within its ‘Down Down’ program made it harder for customers to identify genuine value for money while shopping for household essentials.
“This case has increased transparency and accountability in relation to Coles’ Down Down program.”
Products named in the proceedings include Arnott’s Shapes biscuits, Bega cheese, Cadbury chocolates, Coca-Cola, Colgate toothpaste, Kellogg’s snack bars, Sanitarium Weet-Bix, Nescafé instant coffee, Lurpak butter, Karicare formula, and Weet-Bix, among others.
Coles acknowledged the decision in an ASX announcement, stating that it is reviewing the judgement. The company said the Court found all price increases “resulted from supplier cost price increases and were, therefore, commercially justifiable” – framing that distinction as material.
The Court will determine penalties and any other orders at a separate hearing; the ACCC had flagged a maximum potential penalty of $150 million.
The proceedings were launched by the ACCC in September 2024 alongside separate action against Woolworths over its equivalent ‘Prices Dropped’ program. The Federal Court has reserved judgment in the Woolworths matter; the ACCC has confirmed it will not comment on those proceedings while they remain before the Court.
The action was the culmination of sustained regulatory scrutiny of the two major retailers. Woolworths and Coles together account for around 67 per cent of national supermarket retail sales, and the ACCC’s 12-month supermarket pricing inquiry – which ran concurrently with the legal proceedings – found the pair operated in an oligopolistic market with limited competitive pressure to constrain pricing behaviour.
The reputational damage to both retailers was already significant before today’s ruling. Roy Morgan data cited when the case was filed showed Coles had fallen from Australia’s fifth most trusted brand in December 2023 to its ninth most distrusted brand by March 2024, with ‘tricky pricing’ and ‘focus on profits over customers’ cited as the primary drivers.
The ACCC’s final supermarket inquiry report, delivered in late 2024, made 20 recommendations across competition, supplier, consumer, and remote Australia issues. Coles said at the time it had already moved to simplify promotional tickets and provide additional transparency to customers. The Federal Court’s ruling today tests whether those changes went far enough, and fast enough.
A penalty hearing date has not yet been set.
