The Australian Competition and Consumer Commission is suing Coles for allegedly misleading customers through its Down Down campaign. Photo: Michelle Kroll.
Coles has steadfastly denied that its Down Down campaign was deceptive or misleading to consumers, arguing that prices were set months before the promotions were launched.
The ACCC has claimed the supermarket’s promotion wasn’t “fair dinkum” because prices appeared to be temporarily increased before being “slashed” as part of the campaign.
However, these prices were often higher than what a consumer paid for the item before the price increase.
Barrister John Sheahan KC appeared on behalf of Coles Supermarkets Pty Ltd in the Federal Court, outlining that category managers usually relied on ‘average movement methodology’ to decide on prices, and the process of choosing a price usually took about six months.
“This process [of] planning for and implementing a promotion is complicated,” he said.
He explained that the factors to be considered included volume forecasts, supply chain assessments, in-store space allocation, and suppliers’ proposed retail prices.
“Coles tended to place quite a bit of weight on supplier recommendations,” Mr Sheahan said.
During its opening arguments, the ACCC was critical of changes to policy guardrails at this time, reducing the period between when items could be advertised in promotions.
Mr Sheahan rebutted this, stating that for certain promotions, such as the Down Down campaign, the six-month process could be “truncated” to approximately three months.
When negotiating with suppliers on prices, he said conversations usually covered a range of products, not just the items singled out for the promotion.
“There should be no surprise at all about that,” Mr Sheahan submitted.
Justice Michael O’Brien said Coles needed to answer the question of what it felt the Down Down promotion generally conveyed to a customer, and what they thought would be understood by the general public.
This was especially true regarding the phrase ‘down down’ and the Big Red Hand used in advertisements.
“Not much,” replied Mr Sheahan.
“It’s an indication that Coles is trying to keep prices low.”
Mr Sheahan also pointed out that the Down Down campaign was different to other specials given its timeframe.
Specials generally last a week, whereas Down Down prices may be held for months to provide “longer-term price relief”.
It resulted in price certainty for consumers and suppliers and also meant Coles staff didn’t need to constantly print and update price tickets on shelves.
“It [tells customers] you don’t need to buy [that item] this week … if you don’t need it,” Mr Sheahan argued.
“There’s an ability [for consumers to] feel more comfortable for planning [their] budgets.”
The ACCC’s investigation examined 245 everyday products between February 2022 and May 2023.
Mr Sheahan noted that, during this period, there were frequent changes in item prices because Australia’s inflation was also high.
The defence wrapped up its opening before the lunch break on Tuesday (17 February), leaving the afternoon open for technical legal arguments.
The case is expected to last 10 days.
Original Article published by Claire Fenwicke on Region Canberra.
