Coles Found to Have Misled Consumers

Co-Authored by Vishaal Kudupudi

KEY TAKEAWAYS:

• The Federal Court found Coles misled customers through its “Down Down” discount program by artificially inflating prices before promoting fake discounts.
• Coles is now exposed to penalties of up to $50 million per breach, with a sentencing hearing still to come.
• Supermarkets cannot claim a discount is genuine if the price never actually went below what it was before the promotion started.
• Consumers have real legal protections, and this ruling indicates that regulators are watching how supermarkets present pricing to shoppers.

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Did Coles Mislead Consumers With Its Down Down Discounts?

The Federal Court found that aspects of Coles’ “Down Down” campaign were misleading because some products were temporarily increased in price before being promoted as discounted items, creating the impression of savings that were not genuinely available.

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The Case of Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2026] FCA 598

The Australian Competition and Consumer Commission (ACCC) took legal action against Coles over its well-known “Down Down” pricing campaign, alleging that shoppers were misled about genuine discounts on everyday household products.

The case related to 245 supermarket products sold between February 2022 and May 2023. According to the ACCC, Coles temporarily increased prices on certain products before later advertising them as “Down Down” specials, creating the impression that consumers were receiving meaningful savings when that was not always the case.

During the hearing, the Federal Court examined 14 separate “Down Down” promotions across a sample of common household products, including:

• Karicare Follow On Formula
• Coca-Cola 2L
• Arnott’s Shapes Biscuits
• Colgate Toothpaste
• Rexona Deodorant
• Lurpak Butter
• Nature’s Gift Dog Food

The ACCC argued that some products had their prices increased by at least 15% for relatively short periods before being promoted as discounted items. In some cases, the “sale” price was still the same as, or even higher than, the earlier long-term regular price consumers had previously been paying.

A particularly strong example considered by the Court involved Strepsils Honey & Lemon Lozenges. The product had been sold at $5.50 for a long period before Coles increased the price to $7.00 for 28 days. It was then promoted under the “Down Down” campaign at $6.00. While shoppers were presented with a promotional discount, the “sale” price remained higher than the earlier regular price of $5.50.

 

Federal Court Judgement

On 14 May 2026, Justice Michael O’Bryan found that Coles breached sections 18(1) and 29(1)(i) of the Australian Consumer Law after concluding that the “Down Down” promotions were misleading to consumers. The Court found that the promotions gave shoppers the impression they were receiving genuine discounts and real savings, when in many cases that was not actually true.

A major issue in the case was that many products were not sold at the higher “was” price for long enough to make that price a genuine regular selling price. Instead, prices were increased for short periods and then reduced again under “Down Down” promotions, creating the appearance of a discount even though consumers were often not receiving a real saving at all.

Although Coles argued the price increases were driven by supplier cost pressures and inflation, the Court focused on how ordinary consumers would understand the promotions. Justice O’Bryan ultimately found that 13 of the 14 sample promotions examined were misleading because the advertised discounts did not reflect genuine price reductions that consumers would reasonably consider real savings.

The Court has not yet determined what penalties or final orders may be imposed on Coles.

 

What Does This Mean for Consumers?

1. Discounts Must be Genuine

Under Australian Consumer Law, businesses cannot artificially inflate prices simply to make a later reduction appear like a bargain. A discount must represent a real saving.

The Court made it clear that a “was” price needs to reflect a genuine regular selling price held for a reasonable period of time. If prices are only increased briefly before a promotion is applied, consumers may be misled about the value of the discount.

2. Consumers Rely on Promotional Pricing

The ACCC Chair confirmed that Coles’ pricing practices made it harder for everyday shoppers to identify genuine value on household essentials. Most shoppers do not track supermarket prices every week. Consumers often rely on promotional tags and sale campaigns to identify value, especially on everyday essentials purchased regularly and often automatically.

The ACCC argued that these promotions made it harder for consumers to tell whether they were actually saving money, particularly during a cost-of-living crisis where families are paying closer attention to grocery spending.

3. Penalties Are Still to Come

The Court has found Coles liable, but penalties will be decided at a later hearing. Under Australian Consumer Law, the maximum penalty for each breach can be up to $50 million. That maximum is set by law, but the final fines or any total payout have not yet been announced. Depending on how the 245 affected products are treated, the overall financial exposure for Coles could be much larger, and further orders may also require changes to how prices are advertised in the future.

4. Woolworths Is Facing Similar Allegations

The ACCC has also brought a similar case against Woolworths over its “Prices Dropped” campaign, and the judgment is still pending. A decision will be handed down at a later date. Both Coles and Woolworths, Australia’s two largest supermarket chains, are now under legal scrutiny over the way they advertise discounts and “sale” pricing. The main concern is that some of these pricing methods may give shoppers the impression they are getting better value than they actually are, especially on everyday household items.

5. What You Can Do

Shoppers should not assume a promotional tag means they are paying less than before. If a shopper believes a pricing claim may be misleading, they can raise it with the ACCC through its website at accc.gov.au.

 

How Can Coutts Help You?

Misleading pricing practices can affect both consumers and businesses. Whether you are dealing with concerns about false advertising, unfair pricing practices, or compliance with Australian Consumer Law, obtaining the right legal advice early is important.

Our team can assist consumers in understanding their rights and help businesses ensure their pricing and promotional practices comply with Australian Consumer Law obligations. Every situation is different; so reach out to the Commercial Law team at Coutts today to discuss your options and receive tailored legal advice.

 

Common FAQs

📌 What was the Coles Down Down case about?
The ACCC alleged that Coles misled consumers by increasing prices on certain products before later advertising them as discounted under its “Down Down” campaign. The Federal Court found that many of these promotions were misleading.

📌 Did Coles lose the ACCC case?
Yes. The Federal Court found that Coles breached Australian Consumer Law by engaging in misleading conduct in relation to several “Down Down” promotions. Penalties are yet to be determined.

📌 What law did Coles breach?
The Court found breaches of sections 18(1) and 29(1)(i) of the Australian Consumer Law relating to misleading or deceptive conduct and false or misleading representations about prices.

📌 Can businesses advertise discounts that are not genuine?
No. Australian Consumer Law requires that advertised discounts represent genuine savings and not create a misleading impression about the value of an offer.

📌 How much could Coles be fined?
The Court has not yet imposed penalties. However, maximum penalties under Australian Consumer Law can be substantial, with potential exposure of up to $50 million per breach depending on the circumstances.

📌 Is Woolworths facing a similar case?
Yes. The ACCC has commenced separate proceedings against Woolworths concerning similar allegations relating to its pricing promotions. That matter remains before the courts.

📌 What should consumers do if they believe a discount is misleading?
Consumers can report concerns about pricing practices or potentially misleading promotions to the ACCC through its official website.

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