Did Coles and Woolies con customers?

Summary

7am Podcast Summary

Episode Title: Did Coles and Woolies con customers?
Date: May 11, 2026
Host: Daniel James (A), an independent daily news show by Solstice Media
Guest: Greg Jericho (B), Chief Economist at the Australia Institute

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Episode Overview

This episode investigates the landmark case brought by the Australian Competition and Consumer Commission (ACCC) against supermarket giants Coles and Woolworths for allegedly engaging in misleading pricing practices with so-called "fake discounts." As cost-of-living pressures and grocery prices rise, the conversation examines the allegations, the supermarkets' defenses, possible outcomes, the broader ramifications for consumers and competition, and potential policy responses.

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Key Discussion Points & Insights

1. What Are Coles and Woolworths Accused Of?

• The Allegations:
  • The ACCC alleges Coles and Woolies deceptively promoted discounts by briefly hiking regular prices, then announcing a "discount" that was actually still above the long-term price.
  • Example items involved include everyday treats: Tim Tams, Fab, Tiny Teddies, and Oreo family packs.
    • Notable Example:
      “Woolies sold the Oreo family pack at a regular price of $3.50 for almost 700 days, spiking to $5 for just 22 days. It was then added to its prices dropped line at $4.50.” (C, 01:40)
    • Fab Example:
      “For 425 days a 2kg pack of Fab was $7, then for 19 days Woolies raised it to $14 and announced it’s on sale at $8.” (B, 01:55)
  • The pattern: raise prices briefly, then announce a ‘discount’ at a new higher price, thereby creating illusory sales.
  • Quote:
    “The ACCC alleges that the price discounts as promoted were misleading because the discount was illusory... Coles and Woolworths planned the temporary price spike in order to establish a new higher ‘was’ price.” (D, 02:57)

2. The Supermarkets’ Defense

• Woolworths’ Position:
  • The company insists their advertised price drops are genuine and reflect actual reductions from recent (even if briefly held) higher prices.
  • Quote:
    “Woolies argues suppliers drove the price hike, stating following Covid, there was a period of extraordinary inflation. At no stage did we mislead or deceive our customers.” (C, 03:32)
  • They argue price movements reflect market forces and sometimes require temporary spikes, from which a true sale can be measured.
  • Quote:
    “People know that prices go up, things don’t stay steady for all time... when we say on the price tag that yes, like for Fab, we dropped it from $14 to $8, well, that is actually what happened.” (B, 03:44)

3. What’s at Stake if the ACCC Wins?

• Wider Impact:
  • The ACCC case is “a huge one,” because Coles and Woolies dominate the market.
    • Quote:
      “This isn’t a corner store, this is everyone’s corner store.” (B, 04:19)
  • A win would establish a high benchmark for truthful sales promotions and deter manipulation across all retail sectors—“everyone... will have to be true blue about their sales.” (B, 05:14)
  • Penalties:
    • “That penalty has to be high enough to be not a cost of doing business for such major companies.” (D, 04:54)
  • Consumer Trust:
    Customers could be confident that sales are legitimate, not manufactured.
    • “Customers don’t deserve to be treated as fools by the supermarkets.” (E, 04:31)

4. Will the Supermarkets Be Found Guilty?

• Legal Gray Area:
  • The ACCC argues supermarkets followed “the letter of the law, maybe, but this is the spirit of the law.” (B, 06:12)
  • The judge hinted the practice may not be “nefarious or misleading” (A, 06:12), creating uncertainty about the outcome.
  • The strategy didn’t stem from legitimate cost increases across the product range but appeared orchestrated to enable manufactured discounts.
    • “There really didn’t seem to be much justification from the supermarkets... It seemed very much more like a strategy.” (B, 07:12)

5. Competition and Breaking the Duopoly

• Enforcement Powers Are Limited:
  • The ACCC can only act on deception or clear collusion—not simply high pricing.
  • “They kind of follow each other’s lead. And they know that they can collude without actually having to collude.” (B, 08:39)
• Lack of Competition:
  • Aldi’s entry spurred a price war, but market shares have since stabilized; true national competition remains elusive.
  • Quote:
    “They’re so big and so entrenched... a rich guy coming in saying ‘I’m going to set up some supermarkets’... might work in a small area, but certainly not nationally.” (B, 10:40)
  • Land banking by Coles and Woolies further discourages new entrants.

6. Policy Solutions: Divestiture (“Nuclear Option”)

• Divestiture Powers:
  • Would force supermarkets to sell portions of their business as an antitrust remedy.
  • Practicality is questionable due to geographic scale, infrastructure challenges, and lack of clear buyers. (B, 11:42–13:56)
  • “If Coles sells their shop, who’s going to move into the local supermarket chain?... Chances are they’d be divesting towards each other. That’s not the solution.” (E, 12:48)

7. The Broader Cost-of-Living Context

• Supermarkets’ Role in Inflation:
  • Recent inflation has allowed supermarkets to obscure real price drivers and increase profit margins beyond their own rising costs.
  • Lack of price transparency leaves shoppers unable to judge what’s fair.
  • Quote:
    “People really don’t have any clue of why something is the cost it is... companies are able to raise prices on things by more than their actual costs are.” (B, 14:18)
  • The court decision is “really crucial” (B, 14:18) amid ongoing cost-of-living concerns.

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Memorable Quotes (With Timestamps)

• “This isn’t a corner store, this is everyone’s corner store.” – Greg Jericho (B), 04:19
• “If this is found to be true, it's completely unacceptable. This is not the Australian spirit. Customers don't deserve to be treated as fools by the supermarkets.” – E, 04:31
• “They kind of follow each other’s lead... They know that they can collude without actually having to collude.” – Greg Jericho (B), 08:39
• “A rich guy coming in... might work in a small geographical area, but certainly not in a national sense.” – Greg Jericho (B), 10:40
• “People really don’t have any clue... companies are able to raise prices on things by more than their actual costs are.​” – Greg Jericho (B), 14:18

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Notable Timestamps for Major Segments

• 00:00–01:40: Introduction of case, explanation of fake discount practices
• 01:55–03:21: Detailed product examples and ACCC’s legal argument
• 03:25–04:08: Woolworths’ defense
• 04:19–05:58: Broader implications if ACCC wins
• 06:12–07:47: Legal complexities and judge’s comments
• 08:05–09:41: Limits of ACCC’s powers and duopoly dynamics
• 09:41–10:40: Discussion of potential new competitors (“Lambo guy”)
• 11:31–13:56: Divestiture debate and challenges of breaking up the giants
• 13:56–16:27: Cost-of-living, market transparency, and why this case matters now

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Conclusion

This episode unpacks the ACCC's significant case against Australia’s two largest supermarkets for allegedly faking discounts by artificially inflating and then “discounting” prices. Regardless of the legal outcome, the discussion highlights the immense power Coles and Woolies hold, the challenge of enforcing competition in Australia’s retail sector, and the urgent need for transparency as grocery inflation bites. The episode ends on the broader economic implications—both for everyday shoppers and the structure of Australia’s supermarket industry.

Transcript

[A]

Foreign James and you're listening to 7am. Tim Tams and Tiny Teddies aren't usually the stuff of federal court cases, but product by product, dollar by dollar, the ACCC has been building its case against supermarket giants Coles and Woolworths over what it claims were fake discounts. Now both cases have wrapped and the judge is reviewing the evidence. With inflation and grocery prices soaring, the timing couldn more crucial today. Chief economist at the Australia Institute, Greg Jericho on the case against the supermarket giants and its implications for Australian shoppers. It's Tuesday, may 12th. Greg, the ACCC has now wrapped its case against Woolworths. The judge is due to hand down his findings against both Woolies and Coles later this year. Can you start by reminding us what the supermarket giants were accused of?

[B]

Yeah, basically the ACCC is accusing them of deceptively pricing items, suggesting that they're on sale, whereas in reality they were not real sales. So what the case with Woolies is focused on is a dozen or so items out of a big long list of items that the ACCC found. Things like we're talking Tim Tams and Fab and Tiny Teddies and all these other items. All the good stuff, all the good stuff.

[C]

Woolies sold the Oreo family pack at a regular price of $3.50 for almost 700 days, spiking to $5 for just 22 days. It was then added to its prices dropped line at $4.50.

[B]

Yeah, a good example is FAP where the ACCC are basically saying that for 425 days 2 kilogram pack of fab was 7 bucks. And then for 19 days Woolies raised the price of that to $14 and then announced, oh, it's on sale at 8 bucks. And the ACCC is saying really? Actually what you've done is raised it from $7 to 8, but you just put in a little 19 days at a higher price so that you could say it's on sale, it's a price cut. And Woolies and Coles did this for a range of items where for a long time it'd be at a certain price that raise it for a couple weeks, maybe three weeks and then drop it to a higher price than it had been previous but below that, that sort of short term price. And the ACCC is saying, look, that's not a real sale. That's you manipulating the system.

[D]

The ACCC alleges that the price discounts as promoted were misleading because the discount was illusory. In addition, the ACCC alleges that in Many cases wereworse and Coles planned the temporary price spike in order to establish a new higher was price for there was now price discount promotions.

[A]

So what was Woolworths defence to these allegations?

[B]

Well, Woolworths are saying, well, it is a sale though it was $14, now it's 8, it has been dropped. We're not lying.

[C]

Woolies argues suppliers drove the price hike, stating following Covid, there was a period of extraordinary inflation. At no stage did we mislead or deceive our customers.

[B]

People know that prices go up, things don't stay steady for all time. And so how long should we have to keep it? You know, we, we kept it up at this high price for a good period of time and then we legitimately did drop it. And when we say on the price tag that yes, like for fab, we dropped it from $14 to $8. Well, that is actually what happened.

[A]

What happens if the ACCC wins this case? What will it mean for Coles and Woolworths and what are the implications more broadly? I'm tipping Greg, this is probably one of the biggest cases the ACCC has

[B]

sort of, yeah, it is a huge one, especially because of who we're dealing with here. I mean we're not just. This isn't a corner store, this is everyone's corner store.

[E]

If this is found to be true, it's completely unacceptable. This is not the Australian spirit. Customers don't deserve to be treated as fools by the supermarkets.

[B]

Coles and Woolies dominate the supermarket industry. But the good thing is it will have broader implications for all businesses. No one else will be able to do this.

[D]

If the ACCC wins, we're seeking a significant penalty. This is serious conduct that is of great concern to us that affected many consumers. With millions of products sold subject to this practice, that penalty has to be high enough to be not a cost of doing business for such major companies to determine.

[B]

What it will really mean is that customers will have a lot more confidence when they actually do see sales on offer that it is a real sale. You know, if they win this case, whether it be Coles and Woolies, whether it be, you know, even things like hardware stores and so on, everyone is actually going to have to be true blue really about their sales and it can't just manipulate it or, oh, let's just have it up for, you know, a time that we think is long enough to get away with, but actually one that we can justifiably say is actually, yes, this is the price that we're charging it at now, and if it is on sale, that is because we're offering it on sale.

[A]

What are the chances of the supermarkets losing, though? Because the judge did make a comment during proceedings that the Woolies scheme didn't strike him as nefarious or misleading. Does that indicate he'll side with the supermarket giants?

[B]

Yeah, it's a little bit concerning. For those who are cheering for the accc, it did suggest that they weren't doing this in a deliberate way to trick consumers, but the ACCC is essentially suggesting, okay, maybe they're not doing it so much to trick them, but they're doing the least amount they had to do for it to be legal, for. For it not to be construed as misleading. So in a sense, the ACCC is arguing, okay, letter of the law, maybe, but this is the spirit of the law. You know, prices do go up over time. If something goes up because of, let's say, transport costs, how long do they have to keep that up before they can drop it down to a sale? Is certainly a legitimate argument, but I think what we're talking about here is not a case of they were having to lift prices for any reason. It was really a case because it was over so many items. There was no sort of conformity of these items that you could say, oh, yeah, they've all gone up because of transport costs. Or, you know, there was a wage rise in that industry. It was just, hmm, they all seem to have been able to raise these things for two or three weeks that they dropped them. And there really didn't seem to be much justification from the supermarkets in terms of all these were economic increases in costs. It seemed very much more like a strategy.

[A]

Coming up, the nuclear option to break out the duopoly. Greg, if the ACCC case is unsuccessful, what other options do we have to keep these behemoths honest when it comes to our supermarket giants?

[B]

Yeah, it's really tough because, yeah, the ACCC in this instance, for example, it's not really arguing about, oh, the prices are too high. It's really about being deceptive sort of false and misleading advertising, essentially. And the problem with the ACCC is most of its powers are linked towards breaking either consumer law, such as laws of advertising, or laws about competition that they're colluding. And what we know is the Colson Woolies, even though they both came up with this very similar marketing strategy.

[A]

Almost identical.

[B]

Yeah, almost identical. They don't do it by ringing each other up and saying, let's do this, they just, they kind of follow each other's lead. And they know that they can collude without actually having to collude. And that makes it really tough if, if the ACCC loses this while the government has given them some more powers to look at prices and to in a sense force the companies to justify their prices. Really that's more about are they price gouging? Are they, you know, really taking advantage rather than trying to get them to compete? And that's the real trouble because they dominate so much that they don't feel the need to compete against each other. They compete almost with each other against everyone else. And when you do see them fight, they don't so much fight over price. They fight over, oh, if, you know, spend 20 bucks, you get a little Disney figurine or things like that. They, they fight over the sort of the edges, over the marginal things and not actually over prices.

[A]

No, I've collected all those figurines so I know how tempting it could be when it comes to competition. Greg, the consumer seems to be sort of cornered here. I mean, billionaire Adrian Portelli, who people might know as the Lambo guy or the guy who bought all the houses on the block, has been teasing to take on Coles and Woolies by launching his own grocery chain. Is Lambo Guy the answer here, Greg? Do we need more competition?

[B]

Oh, look, more competition is definitely what we need. What we saw for example, when Audi came into the market, that actually did set off a price war because Colson Woolies were really scared. And then what we unfortunately saw is everyone kind of settled into their market share. You know, there's only so much that Audi is able to grab given it certainly doesn't have as many supermarkets as Coles and Woolies. And yeah, if Lambo guy comes in, he's clearly not going to be able to compete directly with Coles and Woolies. It's more likely he'll be, you know, competing either with Audi or other smaller sort of corner store style supermarkets and groceries. So that's the problem is that they're so big and they have such, they're so entrenched. And not only they're entrenched, they also own, you know, plots of land where another supermarket might wish to put a supermarket sub time. But Coles or Woolies already owned that with plans to one day maybe they'll put it there if it's profitable for them, but it's certainly not profitable that for them to allow anyone else to build there. So it's a pretty tough problem in that sense. And unfortunately a rich Guy coming in saying, I'm going to set up some supermarkets. Yeah, might work in a small geographical area, but certainly we're not in a national sense.

[A]

The coalition in the past has argued for divestiture powers. Former ACCC by selling Fells is also a fan. What would that look like and could it make a difference?

[B]

I mean, divestiture powers are basically where you have a company or companies who essentially control all of the market and you split them up, the government forces them to sell up parts of, of their business. A A classic example, one that many people think should happen, would be a company like Meta and saying, okay, you basically control all the social media market. You got Facebook and Instagram and WhatsApp. We're going to force you to sell off Instagram, sell off WhatsApp. So certainly divestiture powers are something I've also been calling for because they're kind of a last resort, a nuclear option when you do have a company that has such almost monopoly powers, really. The unfortunate thing with Australia's supermarket sector is it's kind of tough to see how that would work with splitting up coals and Woolies because you'd need someone to actually want to buy them. And, you know, how it would be done would be unclear.

[E]

I'm not sure who, if Coles sells their shop, who's going to move into the local supermarket chain. Chances are they'd be divesting towards each other. That's not the solution.

[B]

But also the reason why Coles and Woolies dominate is Australia is a kind of a tough place to have a supermarket chain because we're spread out so wide with a pretty low population density. And so to encourage someone to come in, say, okay, you're going to have to take on Coles and Woolies and their brands. Yes, you're going to get some of their locations, but you now have to take on all the, the costs of transport and set up those supply chains yourself. It's a big ask and it's why we haven't had a real influx of international competitors coming in and saying, I'll have a bit of that. It's one of those cases where you'd like to go back 30 or 40 years and in some ways sort of ensure that Coles and Woolies weren't able to grab such a huge market by, you know, land banking and other things.

[A]

Inflation and grocery prices are of course on the rise right now, which is a time when traditionally supermarkets tend to rake it in and make sort of huge money. How timely does that make this decision from the court. I know it's later in the year, but we have a fairly clear indication that the cost of living is not going to sort of lessen its grip on us anytime soon.

[B]

Yeah, it's really crucial. And the good thing with this is that we have some pretty recent evidence of what happens, you know, after the, the Russia invasion of Ukraine and the general opening up after Covid really set off a bit of an inflation boom across the world. And it was a situation where supermarkets and companies around the world and certainly here in Australia took advantage of because people really don't have any clue of why something is the cost. It is, you know, and this is one of the key things of this trial, like for example, a packet of Tim Tams, you know, how much does it cost to make what is a reasonable price for it? You don't really know other than sort of reference to what it was last week or maybe what it is in another shop. Because of that, companies are able to raise prices on things by more than their actual costs are. And people kind of think, oh yeah, that damn strait of hormones is raising the price of oil that we know that raises transport costs. So I guess that's what's going on. And it's a case of because of that lack of information opaqueness about what actually is causing prices to go up enables supermarkets certainly to increase their profit margins. We saw that in 22 and 23, inflation rose because companies were raising prices by more than they needed to to increase their profits. And what happened? We were to pay higher in interest rates because the Reserve bank was basically blaming us. So I think this case is very important in that regard because there needs to be at least some pushback on companies being able to price things however they want to make use of that lack of knowledge that we have to be able to say, look, if at least you're offering sales, they have to be a legitimate sale, then of course we still have. The other problem is, well, that doesn't stop them from increasing prices by more than they need to to cover their costs. And that's, you know, a whole other problem that we have to deal with.

[A]

Greg, thank you so much for your time.

[B]

No problem. It's great to chat.

[A]

Also in the news, Australia's first purpose built biocontainment facility will be used to house some of the Australian travelers caught up in the hantavirus outbreak. The five Australians on board the MV Hondius are traveling home on a charter flight in full PPE protective gear. On arrival, they will undergo clinical assessment before being quarantined. The threat of the virus spreading further has been assessed as low. And Liberal frontbencher Tim Wilson now says he would never, ever support a coalition government with one nation, despite refusing to rule out the possibility. Over the weekend, the Shadow Treasurer walked back his comments after other senior Liberals rejected the idea. But Barnaby Joyce says the opposition will have no choice but to cooperate with the minor party after their dominant women Farah proved their power at the polls. I'm Daniel James. Thank you so much for listening to 7am we'll be back tomorrow.