‘Not doing it to be charitable’: Coles manager in testy exchange with ACCC barrister

A former Coles manager who set prices for its pet foods has hit back at the suggestion increasing sales and earning money was the chain’s only motivation for putting a product on special, as the supermarket fights a Federal Court case alleging it misled shoppers with its “Down Down” discounts.

The court heard an at-times testy exchange between the Australian Competition and Consumer Commission’s lead barrister, Garry Rich, SC, and Paul Carroll, who was the head of Coles’ pet food category, on Thursday in Melbourne.

Dog food is one of the key goods that the ACCC is examining as it tries to show that the supermarket chain offered customers false discounts by increasing the price of products before offering specials that resulted in the items costing more than their initial price.

The court heard that Coles priced Nature’s Gift Wet Dog Food in a 12-kilogram tin at $4 between April 18, 2022, and February 7, 2023, was then increased to a $6 “Every Day price” for a seven-day period, before the supermarket cut it to its third price, $4.50.

Coles promoted this price with a red “Down Down” discount label, despite it being 50¢ more expensive than it had been sold at eight days earlier, in a move it has since acknowledged was an error and against its internal pricing “guardrails”.

Rich asked Carroll about the difference between “Every Day” and “Down Down” pricing, along with the internal rules Coles had for when to change them as well as for applying further temporary discounts or increases known as “surging”.

Rich put to Carroll that when negotiating price change requests with suppliers, he was motivated to agree on the new price as well as a plan to reduce it to a cheaper “Down Down” promotional price and red shelf ticket for a longer period. Rich said this was because promotions increased product sales.

“You’re not being charitable, you are doing it to earn money for your employer,” Rich put to Carroll, who disagreed with the statement, insisting he personally cared about the customer and prices they faced.

Rich repeatedly put to Carroll that different aspects of his evidence were untrue, which Carroll rejected.

The court heard further evidence from email exchanges between Carroll – who has since left Coles – and other Coles colleagues as well as the supplier of the dog food in question.

On 10 February 2023, two days after the dog food had increased to $6, Carroll emailed then-head of pricing and value Chris Reid, asking for advice about how to be more competitive with Woolworths in selling the product, which had a price of $4.50. Reid told Carroll the price could be lowered to compete with other retailers once a four-week window at $6 had passed, but not advertised as a “Down Down” special, as it wouldn’t be “in the spirit” of “Down Down”.

“You were planning to do what Mr Reid told you wasn’t in the spirit of ‘Down Down’,” Rich said, which Carroll conceded was correct.

However, Carroll noted staff were encouraged to be competitive, and that Reid had said a lower price of $4.50 would be permissible, as long as it wasn’t promoted with red Down Down stickers and its associated rules.