Coles, Woolworths Sued by Regulator for Misleading Discounts
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(Bloomberg) -- Coles Group Ltd. and Woolworths Group Ltd., Australia’s two biggest supermarket chains, have been sued by the country’s competition regulator over claims they misled shoppers over discounting claims on hundreds of common products.
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The Australian Competition & Consumer Commission alleged the companies briefly inflated prices on popular goods such as Coca-Cola, Tim Tams biscuits and Colgate toothpaste before reducing them to the same or slightly higher than the original price.
“The discounts were, in fact, illusory,” ACCC Chair Gina Cass-Gottlieb said in a statement Monday. “Many consumers rely on discounts to help their grocery budgets stretch further, particularly during this time of cost of living pressures. It is critical that Australian consumers are able to rely on the accuracy of pricing and discount claims,” she said.
Australia has one of the world’s most concentrated supermarket sectors, with Woolworths and Coles controlling just over half of the market, according to Bloomberg Intelligence. Both chains have come under political fire during cost-of-living pressures sparked by stubbornly high inflation, with the government in June introducing larger fines for anti-competitive behavior.
“These are serious allegations that the ACCC is bringing before the courts,” Australian Prime Minister Anthony Albanese said Monday. “If this is found to be true, it’s completely unacceptable. Customers don’t deserve to be treated as fools by the supermarkets.”
The latest inflation data for the June quarter showed the most significant contributors to prices were housing and food, including non-alcoholic beverages. The rise in food and non-alcoholic beverage prices was driven by fruit and vegetables, meals out and take away food, and meat and seafood, data from the Australia Bureau of Statistics showed.
Australian Grocery Sales Market Share
Woolworths, whose Australian food sales rose 5.6% to A$50.7 billion ($34.5 billion) last fiscal year, said in a statement Monday that it will “carefully” review the ACCC’s claims. Coles, whose supermarket sales gained 6.2% to A$39 billion, said it intends to defend the proceedings.
Shares of both retailers fell at least 3.8% in early Sydney trading.