Home Publications Down, Down and Out: The Federal Court rules on Coles’ illusory supermarket discounts

Down, Down and Out: The Federal Court rules on Coles’ illusory supermarket discounts

8 Jun 2026

Competition, Consumer & Regulation

In Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2026] FCA 598, O’Bryan J of the Federal Court delivered a significant judgment on the boundaries of permissible ‘was/now’ pricing (i.e. promotions comparing a promotional price to an earlier higher price).

Though specifically concerning the grocery sector, the Federal Court’s judgment implicitly carries strong warnings for businesses in other sectors contemplating ‘was/now’ pricing promotions that do not reflect a genuine discount.

Background

The case concerned Coles’ well known “Down Down” promotion and whether the ‘was/now’ pricing displayed on Down Down tickets conveyed a genuine discount representation to ordinary consumers.

The Australian Competition and Consumer Commission (ACCC) commenced proceedings alleging that, between February 2022 and May 2023, Coles temporarily increased the retail prices of 245 products before placing those products on Down Down promotions at prices which, although lower than the temporarily increased prices, were higher than or the same as the price at which each product had ordinarily been offered for sale prior to the temporary increase.^[1]

In the interests of efficient case management, the Court considered pricing events relating to only 14 products. These products extended only to manufactured or packaged goods, as opposed to fresh produce, and included items such as 2-litre Coca Cola, Arnott’s Shapes variety packs and baby formula.^[2]

ACCC’s case

The ACCC alleged that the Down Down tickets conveyed to consumers that the Down Down price was “a genuine reduction to, or discount from, the product’s previous regular price” – meaning the price at which the product was ordinarily offered for sale for a reasonable period prior to the promotion. The ACCC contended that this representation was false or misleading because Coles had increased the price of each affected product for only a short period (‘the establishment period’) prior to placing the product on the Down Down promotion.^[3]

Coles’ defence

Coles advanced a defence grounded in the commercial realities of the grocery supply chain. Coles contended that, during the relevant period, it and its suppliers were experiencing significant cost increases – including surges in global commodity prices, packaging, freight, utilities and international shipping costs^.[4]

Coles contended that the genuineness of the ‘was’ price fell to be assessed by reference to a range of factors, including the commercial circumstances in which the price was determined, the period over which the product was offered at that price, and the volume of sales at that price.^[5]

On the ACCC’s primary case, by contrast, changes in the wholesale prices paid by Coles for the affected products were irrelevant because the Down Down tickets did not refer to such prices and consumers were unaware of them.^[6]

The promotional guardrails

A significant body of evidence concerned Coles’ internal ‘promotional guardrails’ -internal rules governing the conduct of promotions. These rules were expressly stated to be required to ensure that promotions were ‘not considered misleading and deceptive advertising’.^[7] Under guardrails that applied pre-March 2022, a product could not be placed on a Down Down promotion if it had been offered at a lower regular non-promotional price in the last twelve weeks prior to the promotion. Significantly, in March 2022, Coles relaxed these rules, replacing the 12-week requirement with a four-week requirement. It was largely following this relaxation of the 12-week requirement that the impugned instances of Down Down tickets occurred.^[8]

The Court’s findings

On the threshold question of the representation conveyed, the Court found that the Down Down tickets represented to ordinary consumers that Coles had reduced the price of the product from the ‘was’ price and, implicitly, that the reduction involved a real or genuine discount.^[9]

According to the Court, incorporated within the notion of a genuine discount from an identified previous price is the notion that the identified previous price was a price at which the product had been ordinarily offered for sale for a ‘reasonable period’.

The critical task for the Court was to determine the length of the establishment period which served as the reasonable threshold for misleading or deceptive conduct^.[10]In reaching its conclusion, the Court took into account that:

prices for manufactured and packaged grocery products were relatively stable from month to month;
the Down Down promotion required prices to remain stable for twelve weeks;
Down Down prices were typically stable for much lengthier periods; and
Coles’ own pre-March 2022 guardrails required a minimum 12-week establishment period^.[11]

The Court concluded that the Down Down tickets would not have been misleading if the products had been sold at the ‘was’ price for a minimum period of twelve weeks immediately preceding the promotion. Conversely, if the product had been sold at the ‘was’ price for a period materially shorter than twelve weeks, the ordinary consumer would not believe the Down Down price was a genuine discount and the ticket would be misleading^.[12]

Outcome and implications

On the above basis, the Court found that 13 of the 14 Down Down tickets considered at trial were misleading because the relevant products were not sold at the ‘was’ price for a reasonable period and, as a consequence, the discount represented on the ticket was not genuine.^[13] Coles was found to have contravened both section 18(1) (misleading conduct in trade or commerce) and section 29(1)(i) (misleading representation as to price in connection with the promotion of supply) of the ACL.^[14]

Notably, the Court observed that its conclusion was “relatively narrow” – the Down Down tickets were misleading solely because the sample products had not been offered at the ‘was’ price for a reasonable period^.[15]Had Coles offered the products at the ‘was’ price for twelve weeks, the tickets would not have been misleading. Curiously, if Coles had maintained the higher ‘was’ price for twelve weeks before discounting, consumers would arguably have been worse off, paying a higher price for a longer period.

This decision concerned Coles’ liability. The penalty judgment is still forthcoming, and the ACCC may seek substantial penalties. This case also parallels a similar ACCC case against Woolworths for their ‘was / now’ pricing practices, which is ongoing.^[16]

Key takeaways

The decision provides important guidance for retailers employing ‘was/now’ pricing strategies.

First, the genuineness of a discount is not determined solely by whether the ‘was’ price had a legitimate commercial basis – the duration for which the product was offered at that price is a critical and independent factor.

Second, internal compliance policies may constitute powerful evidence of a trader’s own understanding of what is required to avoid misleading consumers.

Third, the Court’s adoption of a twelve-week minimum establishment period – drawn from Coles’ own pre-existing guardrails and the broader evidence of pricing stability in the grocery sector – provides a concrete, if context-specific, benchmark against which ‘was/now’ practices may be assessed.

Retailers would be well advised to review their promotional compliance frameworks in light of this decision, with particular attention to the duration of price establishment periods preceding any ‘was/now’ promotional claims.

Many thanks to solicitor Michael Pendlebury for his assistance in the preparation of this publication.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.