The Federal Court Ruling That Exposed Coles' Misleading Discounts

Australian supermarket powerhouse Coles has been hit with a landmark decision from the Federal Court, ruling that the retailer misled shoppers through its long-running 'Down Down' promotional campaign. On May 14, 2026, Justice Michael O'Bryan determined that Coles breached the Australian Consumer Law (ACL) by making false or misleading representations about discounts on 245 everyday products sold between February 2022 and May 2023. This case, brought by the Australian Competition and Consumer Commission (ACCC), the nation's primary consumer protection agency, marks a significant victory for transparency in grocery pricing amid ongoing cost-of-living pressures faced by millions of Australians.

The ruling stems from an examination of 14 specific promotional 'tickets' – the shelf labels showing a higher 'was' price crossed out and a lower 'now' price. In 13 of these instances, the court found the discounts illusory because Coles had not sold the products at the elevated 'was' price for a sufficiently long period beforehand. Typically, genuine discounts require the higher price to be the usual selling price for a reasonable time, which Justice O'Bryan pegged at least at 12 weeks to avoid misleading ordinary reasonable consumers.

Understanding the 'Down Down' Campaign's Origins

Launched in June 2010, Coles' 'Down Down' initiative was marketed as a customer-friendly program promising permanent price reductions on hundreds of popular household staples. The campaign aimed to deliver 'predictable and reliable value' on frequently purchased items like cereals, snacks, and cleaning products, helping families manage their weekly shop more affordably. Over the years, it became a cornerstone of Coles' branding, with eye-catching yellow and black shelf tickets proclaiming savings that drew shoppers in store aisles nationwide.

However, during the high-inflation period from 2022 onward, supplier costs surged due to global supply chain disruptions, energy price spikes, and the aftermath of the COVID-19 pandemic. Coles argued these external factors necessitated price adjustments. Yet, the ACCC alleged – and the court agreed – that the supermarket temporarily inflated prices by at least 15 percent for short durations, often just four weeks under internal 'guardrails,' before applying the 'Down Down' label at what was effectively the previous regular price or higher. This practice disguised routine price hikes as attractive bargains.

How the Misleading Pricing Mechanism Operated Step-by-Step

To grasp the deception, consider the process step-by-step as outlined in court documents. First, Coles would identify a product for a price review amid rising costs. Instead of transparently increasing the everyday shelf price, they hiked it sharply but briefly – say, from $3 to $4 for a pack of biscuits – ensuring substantial sales volumes at this new high to claim legitimacy.

Next, after this short 'establishment' phase, the 'Down Down' ticket appeared, striking through the $4 'was' price and highlighting a $3.50 'now' price. Shoppers perceived a 12.5 percent saving, but in reality, $3.50 matched or exceeded prior norms, yielding no true discount. The ACCC's forensic pricing analysis across 245 items revealed this pattern repeatedly, eroding trust in promotional claims.

• Short price spike: 15%+ increase for 4-8 weeks.
• High-volume sales: To argue the 'was' price was routine.
• Promotional rollback: To a non-discounted level, labeled as a deal.
• Consumer perception: Believed savings amid economic strain.

This wasn't accidental; internal documents showed Coles balancing commercial pressures with customer retention, but the court deemed it deceptive under the ACL's prohibition on conduct likely to mislead.

Affected Products: Everyday Essentials in the Spotlight

The 245 products spanned groceries, health, and household categories – items no Australian pantry is without. The court's sample of 14 tickets covered 12 unique products, with two repeated. Examples include:

These represent high-turnover items, amplifying the reach of the misleading claims across Coles' 840+ stores.

Justice O'Bryan's Detailed Findings and Rationale

Justice O'Bryan meticulously dissected each ticket, concluding that ordinary shoppers would be misled by the apparent savings. For instance, on Rexona deodorant and Arnott's Shapes, the 'was' prices weren't sustained long enough. He rejected Coles' defense that inflation-justified hikes were 'not artificially high,' emphasizing that the ACL focuses on consumer perception, not retailer intent.

The sole exception was Nature’s Gift Dog Food, lacking a 'was' price display. Overall, the judgment reinforces that discounts must reflect sustained prior pricing, setting a precedent. For full details, see the ACCC's official media release.

Stakeholder Reactions: From Triumph to Review

ACCC Chair Gina Cass-Gottlieb hailed the outcome: "This case has increased transparency and accountability in Coles’ Down Down program." Consumer group CHOICE echoed this, with CEO Kate Save calling it a win against practices letting supermarkets 'have their cake and eat it too.'

Former ACCC head Allan Fels described it as ending 'fake discounts,' predicting reputational damage and massive fines. Coles responded measuredly: "We acknowledge the court's decision and are reviewing it carefully," stressing commercial justifications and urging clearer pricing guidelines to prevent future litigation. Explore more analysis in this ABC News report.

Real-World Impact on Australian Households

With Coles and Woolworths holding about 65 percent of the $120 billion grocery market, the duopoly's pricing profoundly affects wallets. During 2022-2023, inflation peaked at 7.8 percent, squeezing budgets. Misled discounts compounded this, as families chased perceived bargains on essentials, potentially overspending by believing they saved.

While exact detriment figures aren't quantified, millions of units sold under false claims imply substantial aggregate harm. Shoppers reported frustration on social media, with trends spiking post-ruling. In regional areas, where alternatives are scarce, reliance on Coles heightens vulnerability.

The Duopoly Dilemma and Cost-of-Living Context

Australia's supermarket sector is dominated by Coles (27 percent share) and Woolworths (33 percent), fostering price opacity. The ACCC's parallel case against Woolworths over 266 'Prices Dropped' items (September 2021-May 2023) awaits judgment, suggesting systemic issues. Government inquiries into pricing power underscore calls for reform.

Amid 2026's lingering economic pressures – wages growth lagging inflation – genuine value is paramount. This ruling could catalyze stricter oversight, benefiting independents and online rivals like Amazon Fresh.

Upcoming Penalties, Class Actions, and Industry Shifts

Penalty hearings loom, with speculation of hundreds of millions in fines – up to 10 percent of annual turnover per breach under ACL. A class action by affected buyers from 2022-2023 seeks refunds, potentially redistributing millions.

Woolworths' fate hangs in balance, while both giants may overhaul discounting: longer price holds, clearer labeling. For deeper insights, check The Guardian's coverage.

Actionable Advice for Smarter Supermarket Shopping

• Track prices via apps like Woolworths/Coles scanners or third-party tools (e.g., Frugal Feeds).
• Compare unit prices, not headlines.
• Shop sales cycles: Stock up when genuine.
• Report suspicions to ACCC hotline.
• Support locals or bulk-buy clubs for alternatives.

Empower yourself: Question claims, verify history.

Photo by Jesse Donoghoe on Unsplash

Future Outlook: A Transparent Grocery Landscape?

This precedent may usher in era of authentic promotions, pressuring reforms like mandatory price history disclosure. As ACCC ramps enforcement, expect empowered consumers and competitive pricing. Australians deserve – and now have stronger tools for – real value at checkout.