ACCC accuses Woolworths of contravening its own guidelines for promotion

During day one of a federal court case, the consumer watchdog has alleged Woolworths "contravened" its own internal policies when placing products on its "Prices Dropped" program. Both the Australian Competition and Consumer Commission (ACCC) and Woolworths gave opening statements that were punctuated by lengthy exchanges with the judge about what was relevant. The case is similar to one the ACCC pursued against Coles in February , which has already gone to trial and is awaiting a highly anticipated judgment. Both supermarket giants are being accused of misleading consumers by intentionally increasing a product's price for a short period, before discounting them to a price that was more than, or the same as, the initial price. The ACCC claimed Woolworths shoppers weren't receiving genuine discounts on hundreds of items. Michael Hodge KC, who is representing the consumer watchdog, said the 266 products in question contravened Woolworths internal guidelines known as guardrails. "If these guardrails, as they existed in 2020, had been applied in relation to the products that we're concerned with, then all of them would have contravened the price-establishment period guideline," he said. Michael Hodge KC is representing ACCC in its case against Woolworths. ( ABC News: Billy Cooper ) The 'power' of the promotion Mr Hodge argued the "power" of the "Prices Dropped" marketing message was that it conveyed to a shopper that Woolworths had "done something remarkable or unusual". "It has dropped the regular shelf price," he said. "The subtle magic of the prices dropped message, that draws the consumer in, is ... that the new stable price is lower than the old stable price," he said. He used the example of the Oreo Family Pack Original ticket, which showed the product at the price of $5 on December 19, 2022, then dropped to $4.50. He explained from January 2021 to the end of November 2022, the item was being sold at less than $4. "Then there's a brief period of a few weeks when the product goes up to $5, and then after a few weeks the price drops back down to $4.50, and is now described as Prices Dropped," he told the court. He argued consumers would form the view that based on the price history of the product "that the ticket was misleading or false". The price of the Oreo Family Pack spiked to $5.00 for 22 days before Woolworths put it on a "Prices Dropped" price of $4.50. ( Supplied: ACCC ) There was also a lot of back and forth between Mr Hodge and Justice Michael O'Bryan about what an average consumer would think about when they saw the "Prices Dropped" tickets. Justice O'Bryan suggested "consumers wouldn't over-intellectualise these tickets at all". "They wouldn't be thinking in the terms that you put to me in the first few minutes of this opening session, but at a much more general level ... that what was flagged on that ticket was some kind of genuine discount," he said. Justice O'Bryan said Mr Hodge would have to persuade him that in the "10 seconds" a consumer decided to buy a product after seeing the Prices Dropped signage, that they were thinking more than, "Woolworths is telling me that there is a real and genuine discount from that price to that price". "Perhaps Mr Hodges, when you're shopping in Woolworths there might be more analysis going on," he laughed. "But I suspect for most consumers it doesn't go much beyond that." Woolworths 'largely removed' guardrails Mr Hodge told the court Woolworths had changed the way they implemented their "Prices Dropped" policy at the beginning of 2022 because they were trying to put more products onto the popular promotional program. He also referenced an email from a pricing manager to staff members which mentioned the introduction of a "new price establishment period of three to six weeks" around this time. He alleged at the time Woolworths had "largely removed their guardrails" and were only setting lower shelf prices for some products so they could increase it when it went on the Prices Dropped promotion. The consumer watchdog claims Woolworths prevented shoppers from making informed choices during the relevant period. ( ABC News: Billy Cooper ) "That 'was' price is only being put in place in order to establish it for the purposes of them being used in the ["Prices Dropped"] ticket." In response, Woolworths lead counsel Robert Yezerski SC rejected the ACCC's claims telling the court his client had provided "ample evidence" of genuine prices. Mr Yezerski said the products had been sold in significant quantities at the higher prices before being on a "Prices Dropped" promotion. He also said suppliers had requested cost increases in almost all of the cases. The hearing continues.