The ACCC alleges Woolworths broke Australian consumer law by offering 'illusory' discounts through its 'Prices Dropped' promotion. Between September 2021 and May 2023, Woolworths temporarily increased prices of at least 266 products before placing them on promotion, the ACCC alleges. The third 'discounted' price was in most cases higher than the original long-term price before the short-term spike, according to the ACCC. ACCC barrister Michael Hodge argued consumers understand that a 'Prices Dropped' ticket means an item's long-term regular price has genuinely decreased. He said the promotion communicates that Woolworths has done something remarkable by dropping the regular shelf price. The ACCC presented an example of a family pack of Oreos: first priced at $3.50 for nearly two years, then increased by 43% to $5 for 22 days, then placed on 'Prices Dropped' at $4.50.
Woolworths denies the allegations, arguing the ACCC misrepresents what drives prices at the shelf. Woolworths' legal team argued price increases sometimes fell below suppliers' recommendations and occurred against a backdrop of rising inflation after the COVID-19 pandemic. Justice Michael O'Bryan questioned whether the length of time items were sold at the increased price was relevant to the ACCC's argument.
Woolworths engaged in 'marketing magic' to trick customers into thinking they were getting genuine discounts as part of the supermarket's 'Prices Dropped' promotion.
The ACCC launched joint action in 2024 against Woolworths and Coles. Woolworths dropped the 'Prices Dropped' marketing campaign after the ACCC brought legal action. The product list was pared down to 12 agreed items to be scrutinised in court. Two separate class action lawsuits seeking to reimburse shoppers are underway against Woolworths and Coles. Up to 50,000 Woolworths customers could receive up to $1,300 in compensation if Woolworths is found guilty.
It communicates to a consumer that Woolworths has done something remarkable or unusual, it has dropped the regular shelf price.
The subtle magic of the 'prices dropped' message that draws the consumer in is to say that the new stable price is lower than the old stable price.
One tends to think ... if the price establishment period was three months, we wouldn't be here. If it was always one week, the case might not be fought. We're somewhere in between, and that's what makes this case rather difficult.