Australia's Biggest Supermarkets Sued by Regulator Over Misleading Discounts

By Mike Cherney

SYDNEY--Australia's competition regulator said it is suing Woolworths and Coles, the country's two largest grocery chains, for misleading customers with their discount pricing.

The grocers could face tens of millions of dollars in penalties, the Australian Competition and Consumer Commission said Monday. It alleged the grocers raised prices on many common supermarket products before discounting them, so it would seem to consumers that the discounts were bigger.

However, in some instances, the discounted prices were higher than the original price before the temporary spike, according to the regulator, which alleged the discounts were illusory.

"Many consumers rely on discounts to help their grocery budgets stretch further," ACCC Chair Gina Cass-Gottlieb said. "It is critical that Australian consumers are able to rely on the accuracy of pricing and discount claims."

The legal action comes amid increased scrutiny of Australia's supermarket sector, with grocers facing allegations of price gouging and high profits at a time when many Australians are struggling with cost-of-living issues.

The regulator alleged the conduct involved 266 products for Woolworths at different times across 20 months, and 245 products for Coles at different times across 15 months. It added that there are separate proceedings against each grocer, and no allegations of collusion.

Coles said it intends to defend against the proceeding, and that the allegations relate to a period when there was significant inflation, both from its suppliers and in the grocery chain's own costs.

"Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers through the recommencement of promotional activity as soon as possible," the grocer said in a securities filing.

Woolworths said it would carefully review the claims and continue to engage with the regulator on the matter. Chief Executive Amanda Bardwell said it is important that customers can "trust the value they see when shopping our stores."

Write to Mike Cherney at mike.cherney@wsj.com

(END) Dow Jones Newswires

September 22, 2024 21:04 ET (01:04 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.