A stark reminder for retailers: the Federal Court’s recent decision on misleading pricing
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2026] FCA 598
The Federal Court has found that Coles misled consumers by briefly increasing grocery prices before promoting them through its ‘Down Down’ discounts, using ‘Was’ price comparisons that did not reflect genuine savings. The Court analysed 14 sample promotional tickets and found 13 to be misleading because the products had not been sold at the ‘Was’ price for a reasonable period.
The decision will be closely analysed by Woolworths, which has recently concluded arguments in a substantially similar Federal Court case, with judgment pending.
Key takeaways
If using a price comparison as part of a promotion, the former price should have been offered to customers for a reasonable period of time before the promotion begins. While the 12-week period in the Coles case is a useful guide, retailers should consider what is reasonable in their particular circumstances, implement appropriate policies and seek advice where necessary.
Increases to the price of goods and services should be commercially justified, including by reference to rising costs. The ACCC and the courts are likely to be critical of artificial inflation of ‘Was’ pricing that makes savings appear greater than they are.
Comparative pricing can be misleading even if the ‘Was’ price has not been artificially or deliberately inflated.
The ‘ordinary consumer’ is unlikely to analyse how long a price was in place before a promotional discount is offered, and may instead intuitively believe that a discount is genuine. Retailers should consider who their customers are, and what the ordinary consumer would believe when seeing a promotion advertised.
A finding of misleading conduct does not require proof that consumers suffered actual harm. It is enough that ordinary consumers were likely to form an incorrect impression.
Background
The ACCC alleged that between February 2022 and May 2023, Coles engaged in misleading and deceptive conduct in contravention of sections 18(1) and 29(1)(i) of the Australian Consumer Law by temporarily increasing and then discounting the retail prices of 245 products through its well-known ‘Down Down’ promotion.
In most cases, the Down Down pricing tickets displayed the promotional price alongside a 'Was' price, being the temporarily increased price. Although the Down Down prices were lower than the ‘Was’ price, they were typically the same as, or higher than, the prices consumers had been paying before the temporary increase. The ACCC argued that the tickets were false and misleading because the ‘Was’ price had only been in effect for a short period of time.
The court's analysis
Justice O’Bryan applied the four-step framework helpfully set out by the High Court in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186 at [80] to [84] to assess the conduct, requiring the court to:
identify the conduct;
consider whether the conduct was in trade or commerce;
consider what meaning the conduct conveyed; and
determine whether, in light of that meaning, the conduct was misleading.
It was not in dispute that the conduct was in trade or commerce.
What did the Down Down promotion convey to ordinary consumers?
The court found that ordinary consumers consisted of members of the general public who shop for groceries at Coles. These consumers would not undertake a detailed analysis of the Down Down promotion but would instead form an intuitive and immediate view that the price of the products had been reduced and the discount was genuine, rather than a decrease to a temporarily increased price.
Were the representations conveyed by the Down Down promotion misleading?
To answer this question, Justice O’Bryan considered whether the ‘Was’ price was one at which the product was offered for sale for a reasonable period, such that the Down Down discount could be regarded as genuine.
The factors bearing on this included:
the circumstances in which the price was increased,
the level at which the ‘Was’ price was set,
the period for which the product was sold at the ‘was’ price, and
volume of products sold at that price.
Importantly, the court found that the ‘Was’ price had not been artificially increased, but was responsive to increased supplier costs, and that products were sold at the ‘Was’ price in commercial volumes at or below the supplier’s recommended price.
However, the sample Down Down products had only been offered at the ‘Was’ price for around four weeks in some cases, and as little as seven days in others, which the Court found were not reasonable periods of time.
Justice O’Bryan accepted that reasonable minds may differ on what constitutes a ‘reasonable period’. However, drawing on Coles’ own internal ‘guardrails’ (which, until March 2022, required a minimum 12-week price establishment period), his Honour concluded that 12 weeks was the appropriate benchmark for a reasonable period. The court found that an ordinary consumer would not believe the discount to be genuine if they were told that the ‘Was’ price had been effective for fewer than 12 weeks.
The representations were found to be misleading on this basis.
Why one allegation was dismissed
The allegation concerning the Nature's Gift Dog Food product was dismissed because that Down Down ticket did not include a ‘Was’ price.
Without a comparative previous price, the ticket conveyed a more general message that the price was promotional or ‘low’, which the court found was substantively correct in the circumstances.
This is an important distinction, as the 13 other tickets that were found to be misleading all displayed a specific ‘Was’ price that invited consumers to draw a direct comparison and form a belief that they were receiving a genuine saving from an established price.
With the cost of living pressures continuing across and consumers increasingly focused on discounted pricing, the temptation for retailers to promote their products by highlighting comparative savings is high.
The ACCC v Coles decision highlights the risks for retailers in adopting ‘Was/Now’ pricing practices. With misleading pricing remaining an enforcement priority, the ACCC is continuing to closely scrutinise the supermarket and retail sectors.
The landmark case is a timely reminder for retailers to critically review their pricing strategies and price advertising to ensure ongoing compliance with consumer and competition laws.
If you have any questions about this article or what the court’s decision means for your business, please feel free to contact a member of our team.
This article was written with assistance from Lachlan Collins, Law Graduate.
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