The Australian Competition and Consumer Commission has commenced separate proceedings in Federal Court against Coles Supermarkets Australia and Woolworths Group Limited, alleging they breached consumer law through misleading discount promotions. The ACCC alleges the supermarkets used their iconic 'Prices Dropped' and 'Down Down' logos on products that never actually fell in price relative to their genuine regular cost.
The ACCC identified 266 Woolworths products and 245 Coles products allegedly marketed with misleading discounts across 20 months and 15 months respectively. The conduct pattern was consistent: products held at regular prices for months or even years, then subject to price rises of at least 15 per cent for brief periods, before being placed in promotional campaigns at prices lower than during the spike but matching or exceeding the original regular price. Consumers checking shelf labels would have seen reductions from the inflated reference price, not understanding that the "original price" was artificially created.
The timing matters. As Australian households face genuine cost-of-living pressure, the research shows the squeeze is real. The Australian Bureau of Statistics recorded food and non-alcoholic beverage inflation of 3.1 per cent in the year to January 2026. Consumer advocates report families are now spending more than $1000 annually above 2024 grocery costs. Compare the Market data shows average monthly household grocery spend has risen $95 compared to the previous year.
The government has already moved to tighten oversight. From 1 July 2026, new legislation will ban "very large" supermarkets (those with revenue exceeding $30 billion annually) from charging prices that significantly exceed the cost of supply plus a reasonable margin. Only Coles and Woolworths meet that definition. The ACCC will enforce the rules under the updated Food and Grocery Code of Conduct, with maximum penalties of $10 million per contravention, three times the benefit derived, or 10 per cent of annual turnover.
Both supermarkets have contested the allegations. Industry observers remain divided on whether the new regulations will deliver meaningful relief. Some argue that banning excessive pricing and tightening discount claims addresses only symptoms of a deeper problem: the two-company duopoly controlling two-thirds of Australian grocery retail. Without structural competition, even tough enforcement may have limits. The ACCC's final report from February 2025 recommended 20 reforms, including simplified planning rules for community-owned supermarkets in remote areas and mandatory notifications of package size reductions.
For shoppers already stretched by mortgage stress and inflation, the Federal Court case offers a simple question: if you can't trust the promotion labels, how do you know you're getting a fair deal? The court's answer may reshape how Australian supermarkets advertise prices when the case concludes.