Watch live: Coles learns its fate in ‘fake’ Down Down discounts case

Watch Federal Court Justice Michael O’Bryan deliver his decision live here.

The Federal Court is delivering a landmark judgment in a case where the consumer watchdog has accused Coles of misleading shoppers with “illusory discounts” over its Down Down program.

From 9:30AM on Thursday, Federal Court Justice Michael O’Bryan will read out his judgment from a Melbourne courtroom after reaching a decision on the claims by the Australian Competition and Consumer Commission (ACCC). The regulator argued that Coles artificially jacked up prices for hundreds of products for a brief period so they could say their new prices were a reduction on its previous one, when in fact the Down Down price was higher than just a few weeks before.

Coles defended the claims, arguing their discounts were genuine specials to help customers and sales after prices rose because of inflation. A parallel case was also brought against Woolworths. However as that case was heard later, only Coles’ judgment will be delivered on Thursday.

At the height of public fury about inflation in late 2024, the consumer watchdog lobbed legal bombshells at Coles and Woolworths by accusing them of the fake discounts on products that were the same price or even higher than before.

Behind the question that the case rests on – whether Coles’ advertised discounts were genuine – is a second question: whether a product’s “establishing” price, which must precede a “Down Down” discount, was real.

The ACCC’s lawyers have argued this “establishing price” is artificial, and that while shoppers paid it for a short period of time, it existed only to allow for a subsequent “Down Down” promotion to be set at a higher price than the product was previously sold for. Throughout the Coles and Woolworths hearings, O’Bryan asked numerous critical questions of the barristers representing the ACCC.

The consumer watchdog alleged Coles misled shoppers in relation to “Down Down” pricing across 245 products when filing the initial legal action.

But for the two-week hearing, the parties agreed to focus on 12 products sold between January 2021 and May 2023, including 2 litre bottles of Coca-Cola, Colgate toothpaste, 900 gram tins of Karicare baby formula, Rexona deodorant, Lurpak butter and a box of Arnott’s Shapes.

The court heard the example of Nature’s Gift Wet Dog Food, which was priced at $4 between April 18, 2022, and February 7, 2023. It increased to $6 for seven days – its second price – before Coles introduced its third price, $4.50, advertising it as a discount from $6.

In another example tendered in documents and discussed in court, Shapes biscuits were sold for $5 a packet in 2021, then got as high as $6.50 and went back to $5.50 on a Coles promotion.

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