The Federal Court today found that Coles breached the Australian Consumer Law in connection with its “Down Down” promotional program, in proceedings brought by the ACCC.
What happened
In a judgment delivered this morning, the Court found that 13 of the sample 14 products advertised in the “Down Down” promotion were misleading. Importantly, the Court found that the products had not been offered at the advertised “was” price for a reasonable period before the promotion commenced.
The Court accepted that the underlying price increases during the “was” period were commercially justifiable, reflecting real supplier cost increases, but held that commercial justification does not cure a misleading impression where the higher pre-sale price was not maintained for “a reasonable period” to constitute a genuine reference point.
The “reasonable period” question
The central issue in these proceedings was what constitutes a “reasonable period” for a reference price to be established before a discount is promoted. The Court confirmed that reasonableness varies with the circumstances of each case, rather than being determined by a fixed rule. In this case, the Court suggested that a period of at least 12 weeks at the higher pre-promotion price would have been required. Had the products been sold at the higher “was” price for a sustained period of this kind immediately before the promotion, the representations may not have been misleading.
However, retailers should not treat any particular period (including 12 weeks) as a definitive benchmark. The Court’s reasoning turns on whether the higher price was genuinely established in the minds of consumers, and this varies based on the product and its sales history and selling cycles.
Penalties to follow
Today’s judgment is a liability determination only. Penalties and any other relief will be determined at a separate hearing.
Woolworths decision pending
The Federal Court is also expected to deliver judgment in the ACCC’s parallel proceedings against Woolworths over its former “Prices Dropped” program. That decision will provide further guidance on how the Court applies “reasonable period” principles across large-scale supermarket discount campaigns and may further refine the practical implications of today’s findings.
What this means for retailers
This decision reaffirms that a short-term price increase as the basis for a headline “was/now” discount claim will put retailers at risk of contravening the Australian Consumer Law. Where a product’s “discount” price is the same as, or higher than, its longstanding everyday price, the promotion is at serious risk of misleading consumers, regardless of how it is framed.
In light of these findings, retailers should consider reviewing their promotional pricing practices. In particular:
- How long was the “was” price in market before the promotion launched?
- Does the promoted price represent a genuine reduction from an established price, or simply a return to a previous price after a brief increase?
- Is the price history for promoted products documented and capable of being substantiated?
CIE Legal advises retailers and consumer products businesses on promotion design, pricing governance, and ACL risk in advertising and “was/now” claims. If you’d like a targeted review of discounting guardrails or ticketing/online promotion templates, please get in touch.
