THE Australian Competition and Consumer Commission (ACCC) announced on Monday it had commenced separate legal proceedings against both Coles and Woolworths for allegedly breaching the Australian Consumer Law by misleading consumers through discount pricing claims on hundreds of common supermarket products.

The ACCC’s allegations relate to products sold by each of Woolworths and Coles at regular long-term prices which remained the same, excluding short-term specials, for at least six months and in many cases for at least a year.

The products were then subject to price rises of at least 15 per cent for brief periods, before being placed in Woolworths’ ‘Prices Dropped’ promotion and Coles’ ‘Down Down’ promotion, at prices lower than during the price spike but higher than, or the same as, the regular price that applied before the price spike.

“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products,” ACCC chair, Gina Cass-Gottlieb said.

“However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price.

“We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory.

“We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price.

The ACCC alleged the conduct involved 266 products for Woolworths at different times across 20 months, and 245 products for Coles at different times across 15 months.

The prime minister, Anthony Albanese said they were “serious allegations” and added “if this is found to be true, it’s completely unacceptable”, as he announced “the exposure draft of our new mandatory food and grocery code, as well as the amendments to legislation that we will introduce into the parliament this year”.

“We’re launching the exposure draft so that we can ensure that there’s full transparency about where the Government intends to head,” he said.

“Of course, previously there’s been a voluntary code. Quite clearly, that has not been good enough and that’s why we commissioned former minister, Craig Emerson to make recommendations to the Government and this is a fulfillment of those recommendations.

“The legislation that we would introduce would mean that Aldi, Coles, Woolworths and Metcash would face multi-million-dollar penalties for serious breaches.”

Leader of The Nationals, David Littleproud said whilst he wouldn’t speculate on what the penalties should be if the allegations were proven, he said it was the role of government to “change the culture”.

“It’s our job as legislators to make sure they do have the tools and the penalties that sends very strong messages,” he said.

“I think what the ACCC’s actions indicate is what The Nationals have been vindicated in their attempts for many years to say that the supermarkets have not just been treating farmers poorly, but they’ve been treating consumers as mugs.”

Mr Littleproud has also called on the Federal Government to release the ACCC’s interim report into Australia’s supermarket sector as the cost-of-living crisis continues to impact families across the nation.

The interim report, which examined the pricing practices of supermarkets as well as the relationship between wholesale, including farmgate, and retail prices, was delivered to the government last month but has still yet to be released.

Mr Littleproud said the government’s failure to release the report was yet another example of the government dragging its heels on dealing with potential price gouging by the supermarkets that impacts farmers at the farmgate and families at the checkout.

“In 2022, The Nationals called for the Albanese Government to urgently bring forward a Food and Grocery Code review, and then in 2023, we called for the ACCC to be directed to start an urgent price inquiry before Christmas,” he said.

“Labor repeatedly ignored our warnings for more than 12 months before finally announcing powers for an ACCC inquiry in late January this year.

Mr Littleproud said the government was due to receive the ACCC’s interim report into Australia’s supermarket sector by August 31 and Ms Cass-Gottlieb confirmed the interim report had been provided to them.

“Labor needs to urgently release this interim report to allow full transparency on supermarket conduct,” he said.

Australian Dairy Farmers (ADF) applauded the competition watchdog’s legal action and highlighted the irony of Woolworths shaving another five cents per litre off the cost of its homebrand milk on the same day.

“What we’ve seen with the ACCC taking action against Coles and Woolworths is a clear signal that the powers of these supermarkets is too great,” ADF President, Ben Bennett said.

“Coles and Woolworths must understand that these moves, on the back of processors reducing prices to farmers, have real-world consequences for rural communities and the future of Australian dairy production.

“Decisions like this are not made in a vacuum. The reduction in milk prices may seem trivial to consumers, but for dairy farmers, it can mean the difference between staying afloat or shutting down.”

“This price cut undermines the long-term sustainability of the dairy industry and shifts the burden of cost savings directly to the backs of hardworking farmers.

According to the latest forecasts from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), milk production values are already expected to fall by $570 million to $5.5 billion, with most of this decline reflecting reduced farmgate milk prices.

“In no other industry can a pricing decision by management wipe half a billion dollars in value from an entire sector – most of which is directly tied to the returns that farmers receive,” Mr Bennett said.

“Such actions put immense pressure on our dairy farmers who are already grappling with rising costs of production and unfavourable weather conditions.

“These decisions have been made by major retailers and processors without adequate regard for the broader industry implications.”