Australia's consumer watchdog has sued two of the country's largest supermarket chains for falsely reporting permanent price cuts on hundreds of products, the BBC reports. Officials say Cooles and Woolworths broke the law by temporarily raising prices before later reducing them to an amount equal to or higher than the original cost.
Coles and Woolworths are two grocery giants that account for two-thirds of the Australian market. They have recently come under scrutiny from officials due to alleged overpricing and anti-competitive practices.
The watchdog's investigation, prompted by complaints and its own observations, found Woolworths misled customers on about 266 products over 20 months, while Coles misled customers on 245 products over 15 months.
The network's distortions affect all product categories, from pet food, mouthwashes and plasters, to Australian favourites such as Bega cheese, Tim Tam biscuits and Kellogg's breakfast cereals.
Woolworths chain storeRusty Todaro/Shutterstock
Fake promotions in Australia
The Australian Competition and Consumer Commission (ACCC) estimated that companies using false promotions “sold tens of millions of products” and made “significant sales revenues” from them.
The ACCC is asking the Federal Court to Australia imposed “significant” fines on both companies and issued an order forcing them to increase their charity meal delivery programs.
Prime Minister Anthony Albanese said the alleged behaviour, if found to be true, was “completely unacceptable”.
“It is not in the Australian spirit. Customers do not deserve to be treated like fools,” he told a news conference, where he also unveiled a draft bill for a previously promised “code of conduct” for supermarkets.
ACCC Chair Gina Cass-Gottlieb said Coles and Woolworths had been promoting their discounts for years, which Australian customers understood to mean permanent price reductions on many products. “However, in many cases the discounts were actually illusory – she emphasized.
Networks refute allegations
Coles said it would defend itself against the allegations, while Woolworths said it would review the claims. The former also stressed that rising costs were driving up product prices.
“The company tried to find a balance between management and delivering value to customers by running the promotion as soon as possible after the new prices were set,” Coles said.
The statement added that “the company takes consumer law extremely seriously and places great emphasis on building trust.” Woolworths said in a statement that it would co-operate with the ACCC over the claims.
Amid growing scrutiny of supermarkets, the government has ordered a review of the country’s Food and Grocery Code of Practice, with authorities seeking stronger oversight from the ACCC and tougher regulation.
Main image source: Rusty Todaro/Shutterstock