Woolworths used short-term price hikes and subsequent discounts to hide higher prices and mislead Australian consumers, the Federal Court has been told.
The Australian Competition and Consumer Commission’s joint case against Woolworths and Coles discounting policies is approaching its end after 17 sessions.
The watchdog has alleged the two supermarket giants hiked prices for hundreds of products by at least 15 per cent before reducing them to at or above their initial price, but below the spiked price as part of their “Prices Dropped” and “Down Down” promotions.
The short-term hikes made the price drops “fanciful”, ACCC barrister Michael Hodge KC told the court in his closing arguments.
“Whether the representation of the price had dropped was true or not … is fanciful, because when one actually looks at what has actually happened with the particular price of this product, it has not dropped it has increased,” Mr Hodge told the hearing in Sydney.
Woolworths has argued an extended period of inflation following from the COVID-19 pandemic prompted a series of price increase requests and negotiations with suppliers.
But the ACCC said the supermarket giant’s pricing scheme and its temporary price hikes told suppliers and consumers two incompatible things.
“The commission says the fact that you agree to pay more to your supplier does not make it true when you tell your customers that the customers will now pay less for the product,” Mr Hodge said.
Matters around Woolworths’ margins were confidential and not able to be assessed by the court.
But Justice Michael O’Bryan questioned whether the initial prices, sometimes in place for more than 12-months before being temporarily hiked for as little one week, were relevant at all.
“Because the commission’s case properly starts and ends at the reasonableness of price-two,” Justice O’Bryan said.
“The real question is: was it genuine, not artificial, not temporary in an artificial way, illusory, all of these adjectives to describe what might otherwise be going on?”
Justice O’Bryan said he did not find the promotional strategy inherently misleading or nefarious.
In its closing arguments, Woolworths’ barrister Robert Yezerski SC said the watchdog had tried to argue two different cases, one which fell outside its original concise statement.
The commission had shifted its argument to include matters of profit maximisation and price competitiveness.
“Mr Hodge this morning … correctly anticipated our concern as to the extent of what I think even the ACCC accepts as a departure from its concise statement,” he said.
The case failed for two reasons, Mr Yezerski said.
“The first, the alleged misleading or deceptive representation was not conveyed to ordinary and reasonable consumers by the ‘Prices Dropped’ tickets,” he told the court.
“And second, even if it was the period for which that ‘was’ price was charged … was sufficiently long to constitute the products’ previous regular price, and we say in each case the period was reasonable.”
The hearing continues.
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