"Down Down" and "Prices Dropped" under fire: ACCC accuses Coles and Woolworths of misleading discount campaigns
The Australian Competition and Consumer Commission (ACCC) has initiated separate Federal Court proceedings against supermarket chains Coles and Woolworths, alleging that their promotional discount campaigns—Coles' "Down Down" and Woolworths' "Prices Dropped"—misled consumers. The cases focus on whether temporary price increases followed by advertised discounts constituted genuine price reductions. Both supermarket chains deny the allegations.
ACCC Allegations
Core Claims
The ACCC alleges that between 2021 and 2023, both Coles and Woolworths engaged in a practice of temporarily increasing prices on hundreds of products before placing them on promotional discount programs. According to the ACCC, the resulting "discounted" prices were often equal to or higher than the products' original long-term prices before the temporary increases.
Coles: "Down Down" Program
The ACCC's case against Coles focuses on:
- 245 products allegedly subject to misleading pricing practices, with 12 representative items selected for detailed court examination
- The "Down Down" promotional program, which has been in operation since 2010
- Specific products cited include Nature's Gift Wet Dog Food, Karicare baby formula, Arnott's Shapes, Coca-Cola (2-litre), and Rexona deodorant
Dog food example: Nature's Gift 1.2kg Wet Dog Food was sold at $4 for approximately 296 days, increased to $6 for seven days, then reduced to $4.50 and promoted as "Down Down" with a "was $6" comparison.
Baby formula example: Karicare baby formula was sold at $18 for 794 days, increased to $24 for 23 days, then dropped to $21 under a "Down Down" promotion.
Woolworths: "Prices Dropped" Program
The ACCC's case against Woolworths focuses on:
- 266 products allegedly subject to misleading pricing, with 12 representative items selected for court examination
- The "Prices Dropped" program, introduced in 2015 and discontinued in December 2024 after legal action was announced
- Specific products cited include family packs of Oreos, Tim Tams, Tiny Teddy biscuits, Fab laundry powder, and Kleenex tissues
Oreo example: A family pack of Oreos was sold at $3.50 for 696 days, increased to $5 for 22 days, then promoted on "Prices Dropped" at $4.50 with a "was $5" ticket.
Lucky Dog Bones example: Sold at $4.50 under "Prices Dropped" for over a year, increased to $6.50 for 29 days, then returned to "Prices Dropped" at $6.00.
Alleged Internal Policy Breaches
The ACCC presented evidence that both supermarkets maintained internal pricing guidelines, or "guardrails," designed to prevent misleading discounts. These guidelines required a minimum "price establishment period"—typically four weeks—during which a product must be sold at a higher price before a discount could be promoted.
The ACCC alleges that both supermarkets breached these guidelines:
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Coles: Former category manager Rebecca Thompson admitted that the four-week establishment period was not followed for an Arnott's Shapes product, describing it as "human error." The ACCC noted that 62 of 245 reviewed products had "was" prices in place for less than 28 days.
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Woolworths: Merchandise manager Barry O'Leary admitted that a family pack of Oreos was sold at an elevated price for three weeks instead of the required four weeks, describing it as an "error."
Planned Pricing Strategies
The ACCC alleges that in many cases, the supermarkets planned the temporary price increases and subsequent promotional prices in advance, often in coordination with suppliers. Court documents indicate:
- For Woolworths, 254 of 276 products in the "Prices Dropped" program reportedly had prices and supplier funding for promotional tickets planned before temporary price increases occurred.
- A former Coles pet food category manager, Paul Carroll, testified that he sought advice on competing with Woolworths on pricing for Nature's Gift dog food. An internal Coles email from February 2023 advised that a lower price could be offered but should not be advertised as a "Down Down" special, as it would not align with the "spirit" of the promotion.
Supermarkets' Defense
Coles
Coles denies the allegations and has stated that its "Down Down" prices represented genuine discounts. The company's defense includes:
- The period in question (2021–2023) coincided with significant inflation in Australia, which peaked at 8.4% in December 2022.
- Price increases were driven by higher costs from suppliers for global commodity prices, packaging, freight, utilities, and international shipping.
- Products were sold at higher "everyday" prices for four to six weeks in most cases (243 of 255 instances), with significant volumes sold at those prices.
- The "Down Down" promotional prices represented genuine discounts from those established shelf prices.
- The ACCC has not adequately defined what constitutes a "regular" price or its required duration.
Coles legal counsel John Sheahan KC stated that "all prices are temporary" and noted that consumers are primarily concerned with whether a claimed discount is "fair dinkum."
Woolworths
Woolworths denies the allegations and has stated that its "Prices Dropped" promotions were genuine. The company's defense includes:
- The information provided to shoppers was "factually accurate and in no way misleading or fake."
- Following COVID-19, there was a period of extraordinary inflation that pressured suppliers' costs.
- Suppliers requested price increases in almost all cases, and previous lower prices were "pre-inflationary" and no longer relevant.
- A few weeks is sufficient to establish a base price for discounts, particularly during periods of rising inflation.
- Product labels accurately identified that prices had been "dropped," showed the previous higher price, and identified when the product was sold at that previous price.
Woolworths lead counsel Robert Yezerski SC stated that consumers are aware of rising costs due to inflation and expect prices to fluctuate.
Judicial Proceedings
Coles Case
The Coles case concluded hearings in February 2026 after a seven-day trial before Justice Michael O'Bryan. The court has not yet issued a judgment.
During closing arguments, Justice O'Bryan questioned whether the ACCC had adequately pleaded that shoppers believed they were receiving a "genuine discount" or "a good deal." He suggested that Coles' discount pricing "may well be a good deal" when considering factors like supplier cost increases.
Woolworths Case
The Woolworths case began hearings in the Federal Court in Sydney. Key testimony has included:
- Paul Harker, Woolworths' chief commercial officer, testified that internal pricing policies were changed as inflation grew, moving from policies focused on managing supplier dynamics to a focus on customer experience at the shelf.
- Barry O'Leary, merchandise manager, admitted to a breach of the four-week establishment period for Oreos, describing it as an error.
- Sam Woodcock, senior manager, conceded that price hikes and subsequent discounts were pre-planned at suppliers' requests and that non-compliance risked losing products from shelves.
The hearing is ongoing.
Related Financial Outcomes
Coles
Coles reported half-year financial results for the 2026 financial year, coinciding with the conclusion of its Federal Court case:
- Supermarket sales (excluding tobacco) increased by 3.6%.
- Overall group sales rose 2.5% to $23.6 billion.
- Net profits declined 11.3% to $511 million, including a $165 million provision for penalties related to an underpayment scandal.
- Excluding the one-off penalty, net profits increased 12.5% to $676 million.
- Coles declared an interim dividend of 41 cents per share.
- Shares decreased by 7.4% to $20.56.
Woolworths
Woolworths reported half-year financial results for the 2026 financial year:
- Net profit decreased 49% to $354 million, including a $485 million charge for staff remediation.
- Excluding this charge, net profit increased 16% to $859 million, exceeding analyst expectations.
- Australian food division sales increased 3.6%.
- Shares rose 13% to $35.63 on the day of the announcement.
- Woolworths declared an interim dividend of 45 cents per share.
Class Actions
Two law firms have registered consumers for class actions seeking compensation related to the alleged misleading pricing practices:
- GMP Law (Gregory Mackey, Special Counsel): Approximately 50,000 consumers registered. Mackey suggested impacted customers could receive between $200 and $1,300 depending on spending patterns.
- Carter Capner Law (Peter Carter, Director): Over 30,000 consumers registered. Carter estimated households could claim between $2,000 and $5,000.
Both firms have indicated they will file their claims after the ACCC judgments are delivered to minimize legal costs. If the ACCC is successful, the court may impose civil penalties. However, regulatory penalties are paid to the government and do not automatically return money to consumers.
Industry Context
Coles and Woolworths collectively control approximately two-thirds of the Australian grocery market. Both supermarkets have reported expanding profit margins during the period under scrutiny.
A March 2025 ACCC report characterized the Australian supermarket sector as "oligopolistic" and stated that Coles and Woolworths have limited incentives to compete aggressively on price with each other. However, the report did not declare a duopoly or label grocery prices "excessive."
The case is expected to influence retail discount pricing practices across the Australian supermarket industry. Potential outcomes include:
- If the ACCC wins: Major retailers may need to review discount strategies, and penalties could reach hundreds of millions of dollars.
- If the supermarkets win: The ruling could suggest that consumers should understand that prices fluctuate and that promoted discounts are point-in-time prices.
No judgment date has been set for either case.