Coles Discounts Case Tests Supermarket Pricing Practices

Published: 16 February 2026. The English Chronicle Desk. The English Chronicle Online.

The Coles discounts case has moved into the spotlight as a major legal battle unfolds in Australia’s Federal Court. At the centre of the dispute are allegations that Coles discounts misled shoppers through pricing tactics described as technically accurate but fundamentally deceptive. The Australian Competition and Consumer Commission, widely known as the ACCC, argues that Coles discounts concealed real price rises behind promotional campaigns that appeared generous at first glance. As proceedings began in Melbourne, the regulator outlined claims that the supermarket giant breached consumer law by presenting illusory savings to millions of customers.

The case is being heard before Justice Michael O’Bryan in the Federal Court. The regulator contends that Coles engaged in comparative “was/is” pricing strategies across at least 245 products between February 2022 and May 2023. According to the ACCC, these strategies temporarily inflated prices before advertising modest reductions as part of the retailer’s widely promoted “Down Down” campaign. While the advertised discounts were literally correct in isolation, the watchdog claims they were also utterly misleading when viewed in full context.

The courtroom heard detailed submissions from barrister Garry Rich SC, representing the ACCC. He provided examples that illustrate how the pricing patterns operated. One such example concerned 1.2kg cans of Nature’s Gift wet dog food. The product was sold at four dollars for nearly ten months, amounting to 296 days. The price then rose sharply to six dollars for just one week. Shortly afterwards, the price dropped to four dollars and fifty cents, promoted as a special offer under the “Down Down” banner, with signage stating the item “was” six dollars.

Rich argued that although the four-dollar-fifty price was technically lower than the six-dollar figure, the representation distorted the product’s true pricing history. In his submission, a reasonable consumer aware of the earlier long-term price would not consider the advertised reduction a genuine saving. The regulator maintains that Coles discounts relied on brief price spikes to establish an inflated reference point, which was then used to create the appearance of value.

The ACCC alleges that similar tactics were applied to a wide range of everyday grocery items. These include well-known brands such as Rexona deodorant, Arnott’s Shapes biscuits, and two-litre bottles of Coca-Cola. Each product forms part of a sample that will be scrutinised during the ten-day hearing. The regulator contends that in many cases the final promotional price was equal to, or even higher than, the original long-standing price. As a result, shoppers may have believed they were benefiting from meaningful reductions when the reality was more complex.

Coles, one of Australia’s largest supermarket chains, controls a significant share of the grocery market alongside Woolworths. Together, the two retailers account for roughly two-thirds of national grocery sales. The outcome of this case could therefore have implications that extend far beyond a single company. A parallel case involving Woolworths is expected to follow, meaning the broader supermarket industry may face heightened scrutiny in the months ahead.

In court, the ACCC argued that Coles reduced internal guardrails governing how long a new price needed to remain in place before being advertised as discounted. Previously, products were required to stay at a revised price for twelve weeks before qualifying for promotion. This threshold was reportedly shortened to four weeks. The regulator claims that even this revised standard was not consistently observed. Nearly half of the products examined allegedly failed to comply with the supermarket’s own updated rules.

Another example presented to the court involved Karicare baby formula. According to the ACCC’s submissions, the product was sold at eighteen dollars for more than two years, spanning 794 days. The price then increased to twenty-four dollars for just over three weeks. Soon after, it was reduced to twenty-one dollars and advertised as a discounted item. The regulator asserts that the twenty-four-dollar price was always intended to be temporary, serving primarily to justify the later promotional claim.

Rich told the court that such pricing sequences were not random. Instead, he suggested they were coordinated with suppliers to manage wholesale cost increases while preserving sales momentum. By briefly lifting prices and then presenting modest reductions as Coles discounts, the retailer could introduce higher regular prices without triggering a sharp decline in demand. The court heard that weekly sales revenue for the baby formula rose significantly when the product was advertised as being on sale, compared with periods without promotional signage.

Coles is expected to defend its practices by pointing to genuine increases in supplier costs during a period marked by global supply disruptions and inflationary pressure. Retailers worldwide have faced higher input costs for energy, transport, and raw materials. The company is likely to argue that price adjustments were necessary and reflected broader economic conditions rather than deliberate attempts to mislead customers.

The timing of the hearing coincides with renewed concern over inflation. Australia’s consumer price index rose by 3.8 per cent in the twelve months to December 2025, up from 3.4 per cent in the previous month’s annual measure. Food and non-alcoholic beverages were significant contributors to the overall increase, according to official statistics. For many households, grocery bills remain a visible symbol of financial strain, intensifying sensitivity to pricing practices and promotional claims.

Legal experts note that the case hinges on how an ordinary consumer would interpret the advertised savings. Australian consumer law prohibits conduct that is misleading or deceptive, even if individual statements are factually accurate. The ACCC’s position is that context matters. A short-lived higher price may not provide a fair benchmark for assessing genuine value. If the court agrees, the ruling could reshape how supermarkets structure promotional campaigns.

The regulator is seeking substantial financial penalties and community service orders against Coles. While the exact figures will depend on the court’s findings, any significant penalty would send a strong message to the retail sector. Consumer advocates have welcomed the scrutiny, arguing that transparent pricing is essential in a concentrated market where competition is limited.

For shoppers, the case raises broader questions about how discounts are perceived. Promotional tags often influence purchasing decisions, particularly during periods of economic uncertainty. If a reduction is framed against an artificially high previous price, the psychological impact may differ sharply from the economic reality. The ACCC argues that maintaining trust requires clarity about genuine price movements over time.

As the hearing continues in Melbourne, both sides will present further evidence and expert testimony. The proceedings are expected to examine internal documents, communications with suppliers, and detailed sales data. Observers suggest that the judgment could establish important precedents for comparative pricing practices across Australia.

The Coles discounts dispute therefore represents more than a technical argument over numbers on shelf labels. It touches on transparency, consumer confidence, and the responsibilities of dominant retailers during challenging economic times. The Federal Court’s decision, once delivered, may influence how promotions are designed and regulated for years to come. For now, the spotlight remains firmly on the courtroom, where the boundaries between literal truth and meaningful fairness are being carefully tested.

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