Coles, one of Australia’s largest supermarket chains, has been caught red-handed by the Federal Court for misleading shoppers with its famous Down Down promotion. The court found that Coles falsely advertised discounts by temporarily raising prices before dropping them, tricking customers into believing they were getting a genuine deal. This scandal exposes how the supermarket giant prioritized its commercial interests over consumer trust.
The case, brought by the Australian Competition and Consumer Commission (ACCC), revealed that Coles manipulated its internal pricing rules—called guardrails—to create fake discounts. Justice Michael O’Bryan delivered a 523-paragraph judgment detailing how Coles shortened the required period for a product to stay at its non-promotional price from 12 weeks to just 4 weeks, making the discounts misleading. This practice affected hundreds of products, from deodorant to butter.
How the Down Down Promotion Backfired
The Down Down campaign, known for its catchy jingle and red hand logo, relies on a was/is comparative pricing strategy. This means a product is advertised as cheaper than it previously was. However, to make the discount appear real, the product must have been sold at the higher price for a significant period. Coles violated this principle by rapidly increasing prices and then marking them down, creating an illusion of savings.
The court heard that Coles changed its guardrails in late 2021 and early 2022 due to two factors: rising supplier costs and competitive pressure from rival Woolworths, which used a shorter timeframe for its own Prices Dropped promotion. By January 2022, Coles reduced the guardrail requirement to just 12 weeks, and by March, it dropped to only 4 weeks. Consumers quickly noticed and reported examples to the ACCC, prompting an investigation that uncovered widespread deception.
Key Findings from the Court
- Coles misled shoppers by advertising fake discounts on hundreds of products.
- The supermarket shortened its guardrail period from 12 weeks to 4 weeks, making the was price not genuine.
- Competitive pressure from Woolworths drove Coles to abandon its consumer protections.
- The ACCC identified affected items including butter, deodorant, and other everyday essentials.
Impact on Shoppers and Supermarket Profits
This case highlights how major supermarkets can manipulate pricing to boost profits at the expense of consumer trust. The ACCC’s investigation revealed that Coles’ actions were not isolated incidents but part of a systematic strategy to appear competitive while maintaining high margins. During a period of high inflation, when many Australians were struggling with rising living costs, such deceptive practices are particularly damaging.
Justice O’Bryan stated that the Down Down tickets would not have been misleading if the products had been sold at the was price for a minimum of 12 weeks. By reducing this period, Coles created a false sense of savings. The court is now determining penalties, which could include significant fines. This case serves as a warning to all retailers that consumer law must be respected.
Lessons for Consumers and Regulators
Consumers are advised to be cautious of promotional pricing and to compare prices across different stores. The ACCC continues to monitor supermarket pricing practices, and this case may lead to stricter regulations on comparative advertising. Shoppers can also use price-tracking apps to verify whether a discount is genuine.
For regulators, the Coles case underscores the need for robust oversight of retail pricing strategies. The ACCC’s success in court demonstrates that deceptive marketing will not be tolerated. As Justice O’Bryan noted, guardrails are not just guidelines but essential safeguards for consumer protection.
FAQ Section
What is the Down Down promotion?
The Down Down promotion is a Coles campaign that uses comparative pricing, advertising products as cheaper than they were previously. It features a red hand logo and a jingle, but the court found that Coles misled shoppers by not maintaining the higher price for a sufficient period.
How did Coles mislead customers?
Coles temporarily increased prices on products and then dropped them, marking them as Down Down discounts. This made the discounts appear genuine even though the higher price was not maintained long enough. The court ruled that this practice was misleading under Australian consumer law.
What penalties could Coles face?
The court is yet to determine penalties, but the ACCC is seeking significant fines. Under Australian law, companies can be fined millions of dollars for misleading conduct. Coles may also face reputational damage and increased regulatory scrutiny.
What should consumers do to avoid being misled?
Consumers should compare prices across multiple stores, use price-tracking websites or apps, and be skeptical of flashy promotions. Reporting suspicious pricing to the ACCC can also help regulators take action.
