The Australian Competition and Consumer Commission’s (ACCC) court proceedings against the Woolworths and Coles “oligopoly” commenced in the Federal Court on Wednesday.
The consumer rights watchdog alleged in a media release in September that both supermarkets sold “tens of millions” of products under promotional discounts that were more than or equal to previous long-term prices.
Last month’s ACCC Supermarkets Inquiry Interim Report called Woolworths and Coles an “oligopoly”, which is when a small selection of companies control most of a market.
“Many consumers rely on discounts to help their grocery budgets stretch further, particularly during this time of cost of living pressures,” ACCC Chair Gina Cass-Gottlieb said.
“It is critical that Australian consumers are able to rely on the accuracy of pricing and discount claims,” Ms Cass-Gottlieb said.
“We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory.”
According to court orders released on Wednesday, both supermarkets must file a response to the ACCC’s allegations by November 29.
The ABC reported that Cameron Moore SC, the lawyer representing Woolworths, said “the ACCC’s case is misconceived”.
Lawyer’s Weekly reported that Coles’ lawyer John Sheahan KC, said “almost every case” of an allegedly misleading price increase was the result of “a request by the supplier for a price increase” due to “sudden inflation”.
According to the Interim Report, Woolworths and Coles accounted for 67 per cent of supermarket retail sales in Australia.
“Oligopolistic market structures can limit incentives to compete vigorously on price,” ACCC Deputy Chair Mick Keogh said.
“Increasing grocery prices are one key contributor to the rising cost of living and are front of mind for consumers, given how often people shop at supermarkets and how much of their incomes people spend there.”
The Interim Report’s consumer survey snapshot noted that some respondents were “buying less food, skipping meals and experiencing emotional distress”.
“Many consumers have told us that they are losing trust in the sale price claims by supermarkets,” Mr Keogh said.
Over the recorded 20 months, 266 Woolworths products were involved in the breach along with 245 Coles products over a recorded 15 months, the ACCC alleged.
The discounts in question are Woolworths’ “Prices Dropped” and Coles’ “Down Down” promotions.
Dental hygiene products, Nicorette patches, menstrual hygiene products, baby formula and cereal were included in the list of products the ACCC alleged were affected.
The Interim Report also found that the average grocery basket had increased in price by 20 per cent over the past five years.
The Australian Government announced on October 1 that it will provide the ACCC with $30 million in funding for its retail sector actions.
“More funding for the ACCC will help to make pricing fair, boost competition and make sure that there are significant consequences for supermarkets who do the wrong thing,” Treasurer Jim Chalmers said.
Market researcher Roy Morgan announced Woolworths as the most trustworthy brand in Australia in 2023.
In September, Woolworths dropped to the 5th most distrusted brand nationally, next to Coles in 4th place.
For more information on the ACCC’s findings, click here to view a summary of their Interim Report.
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