SYDNEY (AFP) – Australia’s competition watchdog sued the country’s two biggest grocery chains on Monday, alleging “discount” offers on hundreds of staples were more expensive than original prices.
The regulator said Woolworths and Coles – which together hold about 65 per cent market share – had deliberately jacked-up prices for toothpaste, yoghurt, butter, instant coffee, tampons and more.
These temporary price spikes were then reduced in widely touted discount offers, which were higher than the goods originally cost. The Australian Competition and Consumer Commission pointed to a family packet of Oreo biscuits, which typically sold for AUD3.50 (USD2.39).
Woolworths lifted the price to AUD5.00 before promoting a “Prices Dropped” promotion of AUD4.50 – one dollar higher than originally advertised.
“We allege that each of Woolworths and Coles breached the Australian consumer law by making misleading claims about discounts, when the discounts were, in fact, illusory,” said commission chair Gina Cass-Gottlieb.
Both supermarket chains had “sold tens of millions of the affected products and derived significant revenue from those sales”, Cass-Gottlieb said.
“The false or misleading representations concerned the price of household staples at a time of increasing cost of living pressures,” read an outline of the commission’s legal case.
Woolworths and Coles could be fined up to AUD50 million (USD34 million) a piece if the Federal Court rules against them.
Australia has one of the most concentrated grocery sectors in the world.
This virtual duopoly has given them almost unfettered power to set prices as they please, reaping significant profits over the years.
A cost-of-living crisis has heaped political pressure on the Australian government for supermarket reform, with a separate inquiry into pricing currently underway.