Coles managers face heat from ACCC as bosses escape scrutiny
It feels uncomfortable to watch a string of Coles supermarket young middle managers bearing the brunt of a skewering from the senior barrister representing the Australian Competition and Consumer Commission (ACCC), which is accusing the company of misleading its customers on pricing.
The chief executive, Leah Weckert, who is ultimately responsible for the performance of the company, isn’t facing this hostile public glare, given she was not called by the ACCC to testify.
But she will be ultimately held accountable if the judge finds the supermarket artificially raised prices for a short period before lowering them, in order to dupe customers into thinking they were getting a bargain price.
Weckert will receive her adjudication from shareholders when the case is decided. They will voice their displeasure if Coles is forced to pay large penalties.
But the bunch of mid-managers whose remit is biscuits or dog food are in the ACCC’s evidentiary firing line.
To date the ACCC has landed a few punches but no real king hits.
The consumer regulator came to court armed with a number of instances in which Coles had raised a long-established price on various products for a short period before lowering it again using its “Down, Down” campaign to convey it as a discounted price.
The under-fire nervous Coles category managers, who actually understand what goes into the pricing sausage, have needed to trawl through email communications with suppliers during their price negotiations back in 2022 and 2023.
The debate is also muddied because it covers the hectic post-COVID period in which many of Coles’ suppliers were seeking to impose higher prices on everything from dog food to deodorant.
During the course of the hearing we have seen at least one admission of a mistaken price being made by a category manager.
And we have heard about fears of aggressive or potentially misleading behaviour from Coles’ major competitor, Woolworths, whose time in court to defend similar allegations will follow.
And the court has heard evidence that Coles’ category managers had reacted to Woolworths and its more aggressive price discounting behaviour.
During the period, established internal “guardrails” dictated that Coles sold products at a higher price for at least 12 weeks before discounting them. But staff observed how rival Woolworths raised prices for shorter periods. “They (Woolworths) are really pushing the line here,” one email said.
Evidence was produced that claimed Coles’ guardrails were ultimately changed.
But these guardrails are internal to Coles; they are not subject to external laws. (At least this provides evidence of the intense competition between the two major supermarket brands.)
But the ultimate success of the ACCC action will come down to whether customers were ultimately misled by these allegedly faux discounts.
Does a short-lived spike in a price establish it as a new price in the minds of the customer?
“It’s really asking a bigger question about what ordinary consumers understand about the ‘Down Down’ program,” Justice Michael O’Bryan said.
Coles’ barrister John Sheahan, KC, repeated Coles’ defence that it also reflected a genuine discount.
But he added: “In terms of what consumers would take from the advertising campaigns and the [‘Down, Down’] red hand – not much.”
He argued that including the complex history of price movements on tickets would be confusing for shoppers.
But not according to the hordes of Reddit users who complained about the alleged supermarket price trickery.
Some less price-conscious shoppers wouldn’t have noticed the price of even regularly purchased items changing from week to week. Other customers who adhered to strict budgets are more sensitive to price movements.
However, what is the definition of a typical shopper, and do they feel misled?
Stay tuned.
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