Yeah, Nah, Your Honour!
Legal news, minus the boring bits. Hosted by lawyer Samantha Lee - 20 years in crime and civil law, including the strip search class action - plus a legal and political co-host. Sharp takes on the law and politics shaping Australia and other parts of the world, served with a laugh.
Yeah, Nah, Your Honour!
Episode 3: Down, Down or Up, Up? The Superpricing Deception
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Australia's biggest supermarkets, Coles and Woolworths, are facing legal action from the ACCC over allegedly misleading discount promotions. Were the 'Down, Down' and 'Prices Dropped' campaigns genuine savings, or were shoppers actually paying more than before? In this episode of Yeah, Nah, Your Honour, we break down the ACCC's case, the Federal Court's findings against Coles, and what it all means for Australian consumers.
Welcome to episode three of Yeah Nah, Your Honour, the podcast where we take the craziest legal stories and try to unpack them for you, the listener. I'm Sam Lee, I'm the host of the podcast. I'm a lawyer and I'm here with I'm Josh.
SPEAKER_01I'm also a lawyer and a contributor to the podcast.
SPEAKER_00In our third episode today, we're talking about a major supermarket pricing case involving two of Australia's biggest retailers, Coles and Woolworths. There are allegations that some of their discount promotions weren't actually discounts at all.
SPEAKER_01That's right. The Australian Competition and Consumer Commission, or the ACCC, has taken separate legal action against Coles and Woolworths in the federal court over what it says were misleading discount claims. So put their shopping trolley back, stuff your face with discounted Tim Tams, and let's get started.
SPEAKER_00Who doesn't like a Tim Tam, Josh? This case I'm saying is about mass gaslighting or mass manipulation. I must admit, Josh, I actually find Mast really sexy, but in this situation, it actually seems like an evil manipulating tool. It does my head in this case because the formula behind it is so simple but so evil at the same time. Josh, if you could just take the listeners through the Woolworths case.
SPEAKER_01No worries. The ACCC alleges that Woolworths made misleading price representations about 266 products. We're talking about some very familiar products. Tim Tams, Dorito Salsa, Kellogg Cereal, Listerine, Makona Coffee, Oreo cookies, palm olive dishwashing liquid, Sprite Twisties, Uncle Toby's Muesley bars, and even Vicks Vapor Drops.
SPEAKER_00Josh, how do you think they actually picks these types of products? I mean, it's such a wide variety of products. Do you think they just put their names in the bag and pick them out?
SPEAKER_01I think they just took everything that we love.
SPEAKER_00Yeah, that's for sure. Who doesn't love an Oreo cookie?
SPEAKER_01One of the access examples involved a family pack of Oreo cookies. The product had been sold at a regular price of $3.50 for a long period. Then the price went up to $5 for 22 days. After that, Woolworths put the product back into its prices drop promotion at $4.50 and displayed the was price as $5. So on the ticket it looked like customers were saving $50. But compared with the previous regular price of $3.50, the promotional price was actually a dollar higher. It's about 29% more expensive. The ACCC also alleges that Woolworths had planned the temporary price increase before the promotion, with the temporary price increase being used to establish the higher was price. At Woolworths, products were placed into their prices dropped program, and at Coles they went into the down down promotion.
SPEAKER_00But we're gonna call it up up, Josh.
SPEAKER_01Yeah, that's right.
SPEAKER_00According to the ACCC, the promotional price was sometimes actually higher than or exactly the same as the previous regular price. And that's why the ACCC described the alleged discounts as illusory. Discounts that appeared real, but according to the regulator, weren't genuine savings compared to the products earlier regular prices. A similar allegation was also made about the supermarket chain Kohl's. The ACC alleges that Coles made misleading representations about products. These products included household names like Cabry, Coca-Cola, Colgate, Detoll, Weebix, and Whiskers. The ACCC gave Strepsel's throat lozenges as one example. Those poor people with a sore throat were being manipulated. The product was sold for $5.50 for hundreds of days as part of this down down, what we call up program. Then the price increased to $7 for 28 days. And after that, it returned to a $6 price. Customers would believe that they were getting a discount or a savings of $1. But the previous regular price was $5.50. The supposed discount of $6 was actually 50 cents more expensive than the earlier regular price. And importantly, the ACCC alleges that Coles had also planned the temporary price increase before putting the product back into the promotion. But what did the court actually find?
SPEAKER_01In the Coles case, the federal court has now found that Coles made false or misleading representations about its down-down discounts. The hearing considered a sample of products and the court found that Coles made misleading representations in 13 of the 14 down-down ticketed items. But the story isn't finished yet. The court will determine penalties and other orders at a later date. But Woolworths is different again. The federal court has reserved its judgment in that matter. So the allegations against Woolworths remain just that allegations until the court makes its findings. And that's an important point because the ACCC has brought separate proceedings against the two companies, and it's not alleging that Woolworths and Coles colluded in this matter.
SPEAKER_00So why does it matter to us the shoppers? At first glance, someone might think it's only a few dollars, but that's not really the point. The ACCC says the supermarket sold tens of millions of affected products, generating significant revenue. And for consumers, especially during a cost of living crises, discount signs can influence where we shop and what we put in our trolley. If a shopper sees a sign that says was $7, now $6, they may believe they're getting better value than if the sign simply said $6. The ACCC argues that misleading discount claims can make it harder for consumers to work out where they're actually getting the best deal. And that's why Australian consumer law matters here. The ACC doesn't regulate supermarket prices themselves. Supermarkets are generally free to set their prices. But businesses can't make false or misleading representations about their prices. So what's going to happen next, Josh, in court?
SPEAKER_01Well, the ACC is seeking declarations, penalties, costs, and other orders against the supermarkets. It's also seeking community service orders requiring Woolworths and Coles to fund registered charities to provide meals to Australians in need. And the potential penalties under the Australian Consumer Law can be substantial. For certain contraventions, the maximum penalty for a corporation is the greater of $50 million, three times the reasonably attributable benefit, or 30% of the adjusted turnover during the breach period. But the actual penalties, if any, are ultimately a matter for the court.
SPEAKER_00I think they should provide us with three Tim Towns for two years. What do you think, Josh?
SPEAKER_01Maybe three.
SPEAKER_00So, Josh, let's the takeaways from this case. There's a clear consumer question underneath all this. When our supermarket tells us something is down down or prices dropped, can we trust that the price really has dropped? And in this case, we actually can't. It does actually show that consumers are taken for granted at times. We don't have many supermarket chains in Australia because of our population. And therefore, we have these two big supermarkets playing consumers, which is really a breach of trust, I think, Josh.
SPEAKER_01Yeah, me too. It's anti-competitive. And for us as consumers, the practical lesson is to be cautious about the word discount. A lower price than yesterday doesn't necessarily mean a lower price than the product's usual price.
SPEAKER_00And if you're comparing supermarket prices, the most useful number may not be the crossed out was price. It may be the price you remember paying before the promotion began. A genuine bargain isn't about how big the discount looks. It's about whether you're actually paying less. So, Josh, yeah or nah. Were the supermarkets sneaky?
SPEAKER_01Well, yeah for Coles. And that's not just the internet forum vibes. That was a judicial finding in 13 of the 14 down-down tickets that were subject to the hearing. But we don't know yet for Woolworths. The reserve judgment means we don't know whether the court will see their conduct the same way as it did with Coles. So half of this podcast is case closed and the other half is to be continued.
SPEAKER_00And that's all for this episode of Yeah Nah, Your Honour. Remember that you can donate to keep this podcast going and to keep our supply of Tim Tams coming. Thanks for listening. Objection is a very good thing.