Woolies cites post-COVID instability in prices stoush
Adrian Black |
Australian shoppers did not expect stable prices as grocery costs surged after COVID-19, Woolworths claims in its defence of fake discount allegations.
The consumer watchdog’s Federal Court action against Woolworths and Coles over allegations of fake discounts is approaching its end after 17 sessions.
Woolies misled shoppers between September 2021 and May 2023 by hiking hundreds of products’ prices for short periods before reducing them to above the original price, the Australian Competition and Consumer Commission alleges.
But the commission’s case ignored the impact of post-pandemic price growth on suppliers, logistics and the broader economy, Woolworths’ barrister Robert Yezerski SC said.
“Price stability seems, at the core of the ACCC case, and we say that that concept of stability is just irreconcilable with the macroeconomic reality at the time,” Mr Yezerski told the hearing in Sydney.
“Consumers did not have any reasonable presumption of price stability.”
The commission and Woolworths are at odds over how long prices were established for 12 sample products assessed by the case.
The supermarket giant says the shortest period was 19 days.
The ACCC argued it was as little as a fortnight and one case the price of Fab laundry powder was pulsed between an original $7 and the elevated $14 price on concurrent, one-week yellow-ticket specials before being settled at a “Prices Down” price of $8.
“The ‘price-two’ periods were charged for weeks, and for the sample products, those periods range from 19 days to six weeks,” Mr Yezerski said.
“They were competitive, with many thousands of units sold.”
In each case, price increases had been prompted on the supplier end, Woolie’s legal team argued.
“In other words, there were legitimate underlying cost and funding changes for both the start and the end of the relevant period,” Mr Yezerski said.
In his closing arguments, ACCC barrister Michael Hodge KC called the price hikes “fanciful”.
“Whether the representation of the price had dropped was true or not, is in our submission, something that is fanciful,” Mr Hodge told the hearing.
“Because when one actually looks at what has actually happened with the particular price of this product, it has not dropped it has increased.”
The ACCC argued the pricing scheme ultimately told suppliers and consumers two incompatible things.
“The fact that you agree to pay more to your supplier does not make it true when you tell your customers that the customers will now pay less for the product,” Mr Hodge said.
But Justice Michael O’Bryan questioned whether the initial prices – sometimes in place for more than 12 months before being temporarily hiked – were relevant at all.
“Because the commission’s case properly starts and ends at the reasonableness of price two,” Justice O’Bryan said.
“The real question is: was it genuine, not artificial, not temporary in an artificial way?”
Justice O’Bryan conceded he did not find the promotional strategy “nefarious or inherently misleading”.
The watchdog’s efforts to establish a relative sense of permanence when it came to “regular”, white ticket prices also failed to convince the court.
“There’s really no evidence before me about the stability of white ticket prices on their own,” Justice O’Bryan said.
Woolworths claimed the ACCC had tried to argue two different cases and had shifted its focus beyond its initial scope to include matters of profit maximisation and price competitiveness.
Matters around Woolworths’ margins were confidential and not able to be assessed by the court.
The eight-session hearing is expected to conclude on Friday.
AAP