ACCC Enforcement against Supermarket Misleading Pricing

2 April 2026 in Commercial Lawyers | 7 min read | skip to FAQs

This article discusses the issue of misleading and deceptive conduct in commercial law. We examine the legal proceedings commenced by the Australian Competition and Consumer Commission (ACCC) against major supermarket chains, specifically Woolworths and Coles. The ACCC alleged that both retailers engaged in misleading or deceptive pricing practices through their respective promotional campaigns, “Prices Dropped” and “Down Down”. These actions have raised significant concerns about the protection of consumer rights and the transparency of product pricing practices in Australia’s supermarket sector.

What Constitutes Misleading or Deceptive Conduct?

The Competition and Consumer Act 2010 (Cth) (the Act), includes Schedule 2 which provides the Australian Consumer Law (ACL). The ACL provides, among other things, that a business must not, in trade or commerce, engage in conduct that does, or is likely to, mislead or deceive consumers. This provision is broad and applies to all forms of business practices, and communication including marketing practices such as advertisements, promotions, and representations about prices, products or services.

Misleading or deceptive conduct does not require intention; it is sufficient that the conduct is likely to mislead or deceive a “reasonable person” of the targeted audience. The ACCC aims to assess whether businesses’ representations of discounts, savings, or other special offers provide consumers with a false impression of value in order to obtain a benefit in the form of profit.

Key Provisions of Consumer Law

There are four main provisions of the Act that form the basis of the ACCC’s allegations, being section 18, 29(1)(i), 33 and 34. These include, the following:

Section 18: This section prohibits individuals or businesses from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive, in trade or commerce. It applies broadly to all commercial activities and does not require proof of intention by the party in breach, or reliance by the affected party. This provision covers a broad range of conduct, including false advertising.

Section 29(1)(i): Under this section, it is prohibited to make false or misleading representations regarding the price of goods or services. This includes misrepresentations about discounts, pricing comparisons, or the existence of a sale.

Sections 33 and 34: These sections prohibit individuals or businesses, in trade or commerce, from engaging in conduct that is likely to mislead the public about the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods.

A breach of any or all of these sections may be investigated by the ACCC and may result in a pecuniary penalty imposed by the court. The aim of these provisions is to ensure that corporations conduct business in a manner that does not involve misleading or deceptive conduct to prevent consumers from being exposed to unfair or manipulative business practices.

Penalties for Breaches

Should the Federal Court of Australia (the FCA) find that the reported business has indeed breached the ACL, it could be subject to significant penalties under the Treasury Law Amendment (More Competition, Better Prices) Act 2022 (Cth). For breaches occurring after 10 November 2022, the maximum penalty a court can apply for each breach is the greater of:

1. $50,000,000 (previously $10,000,000)
2. If the court can determine the combined value of the ‘reasonably attributable’ benefit obtained, then three times this value; or
3. If the court cannot determine the combined value of the benefit, 30% of the business’s revenue during the period of the misleading or deceptive conduct (previously 10%).

The use of such stringent penalties underscores the seriousness with which the law treats misleading or deceptive conduct, particularly when it affects a majority of consumers and involves significant financial gain. This type of conduct was the basis of the ACCC’s recent legal proceedings against Woolworths and Coles (the Supermarkets).

Background to the ACCC’s Allegations

In early 2024, the Treasurer directed the ACCC to undertake a 12-month inquiry into supermarket pricing practices, in response to inflation and cost-of-living concerns.

Prior to this inquiry, the ACCC claimed that the Supermarkets breached the relevant provisions of the Act by advertising certain products as “discounted” although, in reality, the Supermarkets temporarily increased the prices before the promotion. This conduct created a false impression of price reduction for consumers. It was alleged by the ACCC that the Supermarkets each engaged in this misleading or deceptive practice between September 2021 and May 2023 (Misconduct Period).

Examples of Breaches to the Act

The ACCC cited numerous instances of this conduct by the Supermarkets that amount to breaches of the Act. One example for each Supermarket is as follows:

1. Woolworths: One unit of Strepsils cough lozenges was sold at $5.50 for a period of 600 days. Woolworths then increased the price to $7.00 and then, one month later, reduced the price to $6.00 under the “Prices Dropped” promotion. This made each unit of Strepsils $0.50 more expensive under the “sale promotion”.
2. Coles: One unit of Oreos was sold at $3.50 for a period of nearly 700 days. Coles then increased the price to $5.00 for 22 days, before reducing the price to $4.50 under the “Down Down” promotion. This made each unit of Oreos $1.00 more expensive under the “sale promotion”.

The ACCC alleged that Woolworths applied this pattern of misleading or deceptive pricing strategy to 266 products over 20 months, with Coles doing the same to 245 products over 15 months. These products included popular everyday household items such as TimTams, Dolmio sauces, Kelloggs cereal, and Energiser batteries.

Alleged Harm to Consumers

The ACCC considered the Supermarkets’ behaviour to have caused serious harm to consumers. This is due to consumers making their product purchases on the basis of the false and misleading information. The Misconduct Period continued for over a year and involved the two largest participants in the Australian supermarket industry, which contributes to the severity of the conduct.

It is also alleged by the ACCC that the use of marketing tactics and price gouging for goods or services have contributed to the emerging cost-of-living crisis. As such, this conduct is particularly harmful to consumers, as the Supermarkets promoted it through their ‘Down Down’ and ‘Prices Dropped’ campaigns, which were marketed as helping consumers save on grocery costs. According to the ACCC, this conduct was especially deceptive and caused avoidable harm to a large number of the Supermarkets’ customers.

The ACCC’s claim alleges that a separate breach of section 18 and section 29(1)(i) of the Act occurred for each instance of misleading or deceptive conduct by the Supermarkets during the Misconduct Period.

The Significance of the ACCC’s Claim

The ACCC’s claim against the Supermarkets is notable for four main reasons:

Consumer Protection

This case underlines the importance of truthful and transparent pricing practices that comply with the ACL. If left unmonitored, the use of such misleading tactics could become standard practice, leaving consumers vulnerable to exploitation, especially during periods of financial hardship like the current cost-of-living crisis. The implication for Australian business is to ensure that any pricing practices, promotions and advertising are reviewed to ensure compliance with the ACL.

Market Integrity

By addressing the alleged misconduct of major retailers, the ACCC aims to uphold fair competition and integrity within the market. Smaller retailers are disadvantaged when larger market participants use these non-compliant strategies to draw in consumers, eroding competition, and distorting price signals. The ACCC’s intention is to promote clear communication to the market resulting in a better informed market and improved competition.

Precedent Setting

Initiating proceedings against businesses that breach Schedule 2 of the Act establishes legal precedent, reinforces business obligations, and can deter similar conduct by others. It sets a clear benchmark for acceptable marketing practices and highlights the consequences of violating consumer protection laws.

The ACCC’s action sends a clear message to Australian business regarding the conduct expected and provides guidance for future pricing practices, promotions and advertising.

Public Confidence

The ACCC’s action serves to maintain public confidence in regulatory bodies, like the ACCC, and the enforcement of consumer protection laws. Without enforcement in practice, trust in the markets and regulators may be lost. Consumers rely on these institutions to closely monitor the conduct of major companies and ensure consumer rights are upheld and each business competes in a manner that is compliant with the ACL.

Government and Regulatory Bodies Actions

In addition to the response of the ACCC and the FCA, the Australian Government has proposed plans to more effectively address consumers’ concerns. Five of these measures are:

1. Implementing a Mandatory Code of Conduct: Introducing a mandatory Code of Conduct specifically for supermarkets that would be monitored by the ACCC. This code would uphold the ACL and require companies to engage in transparent pricing and advertising practices. It would also mandate clearer disclosures about pricing history for consumers to understand the true value of any claimed discounts.
2. Strengthening Regulatory Oversight: Providing the ACCC with greater powers to investigate and act against unfair pricing practices, including the ability to issue infringement notices and enforce compliance.
3. Increasing Penalties: Increasing the penalties for repeated or egregious breaches of the Act. This includes escalating penalties for repeat offenders and accessorial liability for proven misconduct.
4. Improving the Unit Pricing Code: Enhancing the rules that apply to how businesses must display unit prices. This change would ensure readability and visibility of prices in stores.
5. Increasing Transparency: Supermarket chains would be required to notify consumers if a product has decreased in size, ensuring that customers are not misled by similar tactics, including the practice of “shrinkflation.”

These initiatives aim to reinforce the importance of businesses adhering to ACL. The supermarket industry and Australian business in general should remain aware of these proposed changes to ensure ongoing compliance with ACL.

Key Takeaways

The ACCC will continue to hold organisations, especially dominant ones, accountable for non-compliance with the Competition and Consumer Act 2010 (Cth). Any such action by the ACCC may involve significant penalties and reputational damage. It is crucial that businesses:

1. Ensure that promotional pricing strategies comply with ACL, particularly in relation to the representation of discounts.
2. Maintain transparent pricing practices to prevent any potential claims of misleading or deceptive conduct lodged by consumers.
3. Conduct regular reviews of marketing procedures to ensure compliance with the consumer protection laws provided by ACL.
4. Maintain the business reputation and brand reputation by avoiding any potential claims and implementing compliant marketing strategies.

How can BSM Sydney Lawyers assist you?

At Brander Smith McKnight Lawyers Sydney, our experienced commercial lawyers provide tailored legal advice to all levels of business ensuring compliance under Australian Consumer Law. BSM Sydney Lawyer ensures that the marketing strategies and consumer claims made by our business and commercial clients are not considered misleading or deceptive. This reduces regulatory risks, reputational damage and helps avoid future legal disputes. We have a strong track record in business and commercial law, advice on regulatory issues including consumer claims and marketing strategies, BSM Lawyers Sydney is dedicated to protecting your business interests. Our senior commercial lawyers offer a complimentary 20-minute initial consultation to begin discussing your legal matter.

FAQs

BSM Lawyer Sydney have offices conveniently located in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.