Justice O’Bryan set a 12-week benchmark for genuine discounts. Professor Gary Mortimer says that benchmark now works both ways.
The Federal Court’s landmark ruling against Coles was handed down as a win for consumers a finding that the supermarket giant had misled shoppers with promotional discounts that were not genuine. Consumer groups and Labor MPs cheered.
But a retail expert is now warning the ruling carries an unintended sting: shoppers could find themselves waiting longer before prices come down at all.
Queensland University of Technology retail expert Professor Gary Mortimer said the practical effect of Justice Michael O’Bryan’s ruling which established that a product must be held at a higher price for at least 12 weeks before a discount can be considered genuine is that retailers will now be obliged to maintain elevated prices for that minimum period before they can offer a promotional reduction.
“The decision does have some unintended consequences for prices and consumers,” Mortimer told AAP.
“If your favourite box of cereal goes up by 15 per cent next week, you can be assured it will be up at that price for at least 12 weeks before it can be put on a discount.”
What the ruling actually established
The Federal Court found on Thursday that 13 of the 14 sample products examined under Coles’ Down Down campaign had been placed on promotion after insufficient time at the higher reference price meaning the discount displayed on the shelf ticket was not genuine.
One product highlighted during the case was a party pack of Arnott’s Barbecue Shapes, sold at $4.50 for nearly a year before the price was raised to $5.50 for less than a month, then marketed at a Down Down price of $5.
Justice O’Bryan’s ruling means that for a price reduction to be legally advertised as a discount, the higher “was” price must have been held for at least 12 weeks.
The one product of the 14 that O’Bryan did not find misleading was a bag of dog food not because the pricing conduct differed significantly, but because its shelf ticket did not display a “was” price for customers to compare against, removing the direct misleading element.
What retailers are likely to do next
Mortimer said Coles, and likely its competitors, would now restructure their promotional pricing practices to align with the 12-week threshold a shift that protects them legally but changes the rhythm of discounting that shoppers have come to expect.
Prices naturally rise with inflation and input cost increases, he said, and retailers would previously have moved relatively quickly to offer promotional reductions once costs stabilised. Under the new benchmark, that transition cannot happen for at least three months.
ACCC chair Gina Cass-Gottlieb, speaking after Thursday’s ruling, said the decision did not prevent retailers from discounting it simply required the reference price to be genuine.
“Retailers could present a genuine ‘was’ price, rather than a briefly inflated one, for customers to compare with a discount,” she said.
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Consumer groups and politicians welcome the ruling
Consumer advocacy group Choice’s campaigns director Andy Kelly said the ruling addressed conduct that had allowed Coles to profit from the appearance of generosity while prices remained elevated.
“Hiking prices whilst telling consumers that prices are down has allowed Coles to have its cake and eat it too,” Kelly said, adding that cost-of-living pressures made it more important than ever for shoppers to be able to trust that promotional tickets reflected genuine savings.
Labor MP Andrew Leigh framed the ruling as a matter of basic honesty at the checkout.
“A discount should mean a real saving, not a pricing trick,” Leigh said. “Shoppers should be able to trust the ticket on the shelf, without needing a spreadsheet at the checkout.”
A penalty hearing for Coles is yet to be scheduled. A near-identical case against Woolworths over its Prices Dropped campaign has concluded, with a decision still to be handed down.
