The Australian Competition and Consumer Commission alleges Woolworths broke consumer law by offering illusory discounts through its 'Prices Dropped' promotion program. According to the ACCC, the reduced 'Prices Dropped' prices were often the same or higher than the original long-term shelf prices. The regulator launched joint legal action in 2024 against Woolworths and Coles, alleging they broke consumer law using fake discounts. Court documents show the products were sold at their first price for 180 days or longer, before their prices were increased by at least 15% for 45 days or less, then placed on 'Prices Dropped'. The ACCC alleges Woolworths used a strategy known as comparative or 'was'/'is' pricing. The product list was pared down to 12 agreed items to be scrutinized in court. The ACCC is not suggesting Coles and Woolworths colluded or engaged in anti-competitive behavior as part of the alleged misleading conduct.
Woolworths denies the ACCC's claims, saying the regulator has misrepresented what drives prices at the shelf. Woolworths argues price increases sometimes fell below suppliers' recommendations and occurred against a backdrop of rising inflation after the COVID-19 pandemic. Woolworths dropped the 'Prices Dropped' marketing campaign after the ACCC brought legal action against it.
The Federal Court must now determine whether Woolworths engaged in deceptive pricing practices. The ACCC alleges Woolworths temporarily increased prices on hundreds of items before reducing them by a lesser degree to create fake discounts, misleading consumers. Woolworths denies the allegations, arguing price increases were driven by supplier costs and inflation, not a deliberate strategy to trick customers. The court's final judgment remains pending, as does the outcome of similar allegations against Coles.