The Australian government is suing the two biggest grocery store chains in the country, accusing them of deceptive pricing schemes.
The Australian Competition and Consumer Commission—equivalent to the U.S. Federal Trade Commission—is targeting chains Woolworths and Coles. The Commission claims the companies broke the law by raising prices on some items specifically to be able to lower the prices a short time later to claim a permanent price reduction for customers.
Coles immediately denied the allegations and said it would defend against the suit, while Woolworths said it was still reviewing the government’s complaint. Collectively, the two chains have about two-thirds of the market in Australia. Both have drawn the attention of regulators in the past year after accusations of price gouging and other anti-competition practices have been leveled against them.
The Prime Minister, Anthony Albanese, said that the conduct is “completely unacceptable” if the charges prove true. He said price-gouging was “not in the Australian spirit.” Albanese was speaking at a press briefing during which he debuted legislation that would create a “code of conduct” for supermarkets.
According to Commission chair Gina Cass-Gottlieb, Coles and Woolworths have been marketing themselves as cost-cutters slashing the prices on products throughout their stores. Ordinary shoppers believe this means the companies have actually cut their regular prices, she said. But instead, the supposed discounts “were illusory,” Cass-Gottlieb claimed.
The suit comes after numerous consumer complaints as well as the Commission’s own investigation into the stores. The Commission says Woolworths has deceived customers about price reductions on 266 products over the past 20 months, while Coles has been dishonest about prices on 245 products for the past 15 months.
The products included pet food, bandages, mouthwash, cookies, cheese, cereal, and more. The Commission estimates that both companies collectively have “sold tens of millions” of products advertised as having lower prices when that was not true.
The Commission wants the Federal Court of Australia to levy “significant” penalties on both companies. They’re also asking the court to force the businesses to put more money into their charitable food programs that deliver meals.
