Markets 
The claim by Woolworths that Australian shoppers expected grocery prices to rise in the post-pandemic era as part of its defence against the charge that supermarket items labelled as discounted had not genuinely become cheaper during that period is not only hard to swallow but specious.
The Australian Competition and Consumer Commission has accused Woolworths of offering “illusory” discounts on its “Prices Dropped” program and chose 12 representative products out of 266 to support the contention that shoppers were misled.
The consumer watchdog said Woolworths prevented shoppers from making informed choices about essential purchases between September 2021 and May 2023. It tendered the history of an Oreo Family Pack sold at a regular price of $3.50 for 696 days until late November 2022, when it spiked to $5 for 22 days before it was displayed as a “Prices Dropped” price of $4.50.
Woolworths rejected the history as a “mischaracterisation” and told the ACCC the first price of $3.50 was a “pre-inflationary dropped price” and it had only agreed to increase the price after negotiations with its supplier.
The ACCC has taken action in the Federal Court against Woolworths in an expected two-week case that is almost identical to one it took out against Coles last February over its “Down Down” discounts campaign.
The Coles matter has gone to trial and is awaiting a highly anticipated judgment. The ACCC actions against the two supermarket chain giants are crucial legal cases, with the potential for hundreds of millions of dollars in fines.
Previously, the ACCC has made multiple findings and taken action against Woolworths for breaching consumer laws. The regulator had investigated Woolworths for unsafe products and in 2016 the Federal Court ordered the group to pay total penalties of $3.057 million for breaches of the Australian Consumer Law relating to safety issues with house-brand products.
The Woolworths Group owns a range of businesses, including supermarkets, Big W and Petstock stores and other ventures. The successful food division has subsidised the other businesses, delivering strong profits and earnings for the last five years.
The Herald’s Elias Visontay reports the crux of the case is how long a product has to be at a higher price before a discount becomes genuine. Another way of looking at it is this period is now apparently part of a sophisticated marketing tool that fools customers into believing they are receiving value for money.
Supermarkets are free to charge what they like, but the Albanese government has attempted to crack down on price gouging with new mandatory Food and Grocery Code rules banning “excessive” prices beyond a reasonable margin.
The supermarket giants point to rising costs for rising prices, but the old freewheeling days may be over.
The real battle here is for the trust of Australian consumers, who, with ample evidence, are already suspicious of the supermarkets’ behaviour and are struggling to deal with a cost-of-living crisis and potentially rising interest rates.
Consumers will be watching closely the outcome of the Woolworths trial and will be sure to exact harsh punishment if the supermarket is found to be hawking fake discounts.
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