Our Federal Court recently (May 2026) found Coles misled shoppers through deceptive sales tactics.
Coles was sued by the Australian Competition and Consumer Commission (ACCC) for misleading shoppers by temporarily increasing prices before advertising a lower price as a discounted sale. It was claimed that Coles hiked prices on some items for a month, then advertised the products at discounted prices, which were higher than the prices before the price hikes.
This raises a couple questions:
One of them is, did Coles deceive its customers? The ACCC argued that it deceived customers who were attracted by the discount. Those customers, nor any of Coles’ other customers, were not deceived about the sale price. That was clear. This is not a case of seeing a jar of honey advertised at sale price of $10, buying it, then after returning home discovering that you were charged $10 for the honey plus $2 for the glass jar, $1 for the lid and 20 cents for the label. Even if the small print covered those extra items, that would be deceptive selling.
Another question it raises is, does it matter that Coles deceived customers who were attracted by the discount? They did not pay any more than the clearly advertised price, did not receive an inferior product than advertised, were not exposed to any additional risks or late delivery, nor were they misled into buying a product they don’t need. Where is the prejudice they suffered? They did not suffer any. Since the buyers did not suffer any loss and were not prejudiced by Coles’ advertising, there is no wrongdoing by Coles.
The Federal Court decision also raises a couple of issues worth considering:
One of those issues is, the uncertainty it poses for businesses and related complexity in future advertising. What period must elapse after increasing prices before a business may advertise the product at a discounted price? Coles increased its prices for 30 days before offering a discounted price. What is the minimum wait period, is it 31 days, 60 days, 90, 120, 12 months or can one never again offer the product at a discount? Is the wait period different for different types of products, different for different price brackets, or is some other factor relevant? Businesses need certainty and simplicity. This Federal Court decision fails on both accounts.
The other issue it raises is, who bears the brunt of the fine imposed by the ACCC and upheld by the court, who in effect pays for it? The fine was imposed on Coles Group Limited, but who is it? It is a public company, which under law it is a person. The reality however is that all its decisions are made by people representing Coles, with bigger decisions made by its senior executive team. Its human representatives decided on the marketing strategy for Coles and approved the advertising complained of, yet they escape any responsibility for their wrongful decision. They were not fined, nor are they obliged to reimburse the company for the loss they caused it and nor do they suffer any other adverse consequences for that decision. Since the decision-makers escape responsibility, who in effect pays the fine and suffers the consequences? The fine reduces Coles’ profits and cash flow and so reduces the dividends that Coles could pay its shareholders and the amount Coles could reinvest in its business. So, the many thousands of the Mums and Dads who invested (directly or indirectly) in Coles in effect pay the fine. That’s clearly not fair on them. They did not make the advertising decision, nor did they appoint Coles’ executive team or any of those who made the discounting decision and nor do they have the power to fire them. It is absurd that they should bear full responsibility for decisions made by well-paid executives who bear no responsibility.
On matters such as this one, where the law is unclear, it is common for a company to seek legal advice. If Coles sought advice and that advice was that the discount was legal, who should pay the fine? The lawyers should but won’t. They will probably argue that the advice came with a disclaimer of liability – as court decisions are unpredictable. And even if Coles can show them to have been negligent, they won’t pay the penalty imposed by the ACCC because they would be covered by professional indemnity insurance. If the insurer pays, who suffers – it’s the insurer’s shareholders.
Now let’s look at this from a retailers’ perspective: You work hard to keep prices the same but then government significantly increases money supply, which causes everything to go up in price. Since your costs have gone up so much, you can’t maintain prices without going broke. So, you increase prices but then find that many customers stop buying. After a month you need to reduce excess stock, so offer a discount to increase sale volumes. Now, because of this ruling you can’t. Can you ever again offer a discount? Well, that’s not clear, perhaps never. One would like to think that after some time has lapsed, you can discount your products again, but after what period – 3 months, 6 months, a year, 5 years? No idea!
It is frankly ludicrous that retailers have such uncertainty. The business community needs clear rules within which to operate. If rules aren’t clear, their risks are higher and that leads them to charging higher prices to compensate for the additional risk.
This ruling does not improve our wellbeing as a society; it does the opposite. It is high time we changed the rules of the game – by getting rid of unnecessary laws, and public servants who impede human flourishing. We also need to stop unnecessarily enriching lawyers at our expense, and we need to stop our career politicians from causing inflation. A Classic Liberals Australia government will change the law, the Competition and Consumer Act 2010, to: a) ensure that similar cases do not fall foul of it; b) in cases where companies contravene the legislation, the executives who made the wrong decision (rather than the company and shareholders) pay any fines imposed; and c) alleged contraventions of the legislation will be decided by a jury of suitably qualified people.