Woolworths rejects accusations from the corporate regulator that it misled consumers with artificial price hikes followed by smaller reductions. The supermarket chain argues in Federal Court that elevated prices stemmed from genuine inflation pressures rather than deceptive practices.
Court Defense Highlights Inflation Pressures
During Tuesday’s hearing, Woolworths’ legal team explained that the company faced substantial cost increases from suppliers across its product range between late 2021 and mid-2023. Robert Yezerski SC emphasized, ‘Woolworths was facing significant cost price increases from a large number of suppliers across their full range of products.’
The defense contends that claims of manufactured price drops misrepresent commercial negotiations. Inflation impacted groceries more severely than other sectors and affected competitors like Coles and Aldi similarly.
Justice Questions Duration of Price Elevations
Justice Michael O’Bryan noted that the case hinges on how long prices remained temporarily elevated. ‘One tends to think … if the price establishment period was three months, we wouldn’t be here,’ he stated. ‘If it was always one week, the case might not be fought. We’re somewhere in between, and that’s what makes this case rather difficult.’
ACCC Alleges Misleading Tactics
The Australian Competition and Consumer Commission (ACCC) claims Woolworths and Coles temporarily raised prices on hundreds of items before lowering them insufficiently, creating a false impression of bargains. ACCC counsel Michael Hodge described the strategy: ‘The subtle magic of the “prices dropped” message that draws the consumer in is to say that the new stable price is lower than the old stable price.’
Regulators assert the reduced prices often matched or exceeded original levels, violating consumer laws. The action, filed in 2024, covers 266 Woolworths products over 20 months, with 12 items now under scrutiny, including Tim Tams family packs, Carman’s muesli bars, and Sakata rice crackers.
Woolworths’ Response and Broader Context
Woolworths discontinued the ‘prices dropped’ campaign after the ACCC’s challenge. A company spokesperson stated, ‘Following COVID, there was a period of extraordinary inflation, and we were acutely aware that customers expected Woolworths to provide value wherever possible. Inflation also put pressure on our suppliers’ costs, and we worked with them to reduce the inflationary impact on customers through our “prices dropped” program.’
The ACCC does not allege collusion or anti-competitive behavior. Australia’s supermarket industry faces ongoing scrutiny amid post-pandemic profit inquiries revealing high margins.
The hearing continues Wednesday as part of an eight-session trial, with Coles’ defense already presented. Final judgment awaits both cases.
