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Could These Court Cases Change Discount Advertising in Australia?

Recent legal proceedings involving Woolworths and Coles could significantly reshape the rules around misleading discount advertising in Australia.

At the heart of both cases is a fundamental issue under the Australian Consumer Law: when does a promotional discount become misleading?

What are the allegations?

The Australian Competition and Consumer Commission has commenced proceedings against both supermarkets, alleging that certain “discounted” prices did not reflect genuine savings.

In the Woolworths case, the ACCC is examining a number of everyday products. It alleges that some items were sold at a consistent price for an extended period, before being temporarily increased and then reduced again — with the lower price promoted as a “price drop”.

The ACCC’s position is that, in some cases, the promoted price was no cheaper than the original long-term price (as in the price prior to the price rise). This raises concerns that the discounts may have created a misleading impression of savings to consumers.

Woolworths denies these claims, maintaining that its pricing was accurate and that consumers understand prices can fluctuate due to broader economic conditions.

Why this matters for businesses

These cases extend well beyond the supermarket sector.  Over my years in practice, often the question of was/is pricing comes up and clients ponder what is an acceptable “was” price establishment period.  The law is grey on this area.

The Federal Court will need to determine how an “ordinary and reasonable consumer” interprets discount claims. Specifically, whether a discount suggests:

• a reduction from the most recent price; or
• a meaningful saving compared to a usual or long-term price.

The outcome will help clarify how pricing representations should be communicated across all industries and could affect all retailers.

Potential outcomes

If the supermarkets are successful:
The decision may confirm that pricing claims only need to be factually correct at a point in time. This would mean businesses can rely on recent price comparisons, even where prices fluctuate regularly.

If the ACCC is successful:
A ruling in favour of the ACCC would likely require businesses to ensure that the overall impression of a discount is accurate — not just the literal wording.

This could result in many retailers needing to review their promotional strategies.

Financial and legal consequences

Penalties for misleading conduct under the Australian Consumer Law can be substantial.

Depending on the circumstances, businesses may face significant fines calculated per contravention, as well as other orders such as corrective advertising or compliance measures.

These proceedings also increase the likelihood of follow-on consumer claims.

A broader regulatory trend

This is not the first time the ACCC has taken action against major retailers. Previous cases involving supermarket conduct led to regulatory changes, including the introduction of the Food and Grocery Code of Conduct.

The current proceedings may similarly influence how “truth in advertising” is interpreted and enforced in Australia.

Key takeaway

For businesses, the message is clear:

It is not enough for a discount to be technically accurate. The overall impression created must also be clear, transparent, and not misleading.

Now is an appropriate time for businesses to review their pricing and promotional practices to ensure compliance.