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The watchdog who savaged Coles · The Front

• 0:03
  Speaker 1: From the Australian. Here's what's on the front. I'm Claire Harvey.
• 0:06
  Speaker 1: It's Friday May fifteen, twenty twenty six. Labour's picked up
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  Speaker 1: a new MP, former Jackie Lamby, network Tasmanian Senator Tammy Tyrrel.
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• 0:33
  Speaker 1: legislation through. That story's live now at the Australian dot
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  Speaker 1: Com dot a U, along with our analysis of Angus
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  Speaker 1: Taylor's first big moment as Opposition leader the Budget in
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  Speaker 1: reply speech, where he has set out an ambitious vision
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  Speaker 1: to take on Jim Chalmers and Anthony Albanezi. Supermarket giant
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  Speaker 1: Cole's misled consumers with fake discounts, although it didn't unlawfully
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  Speaker 1: jack up prices. That's the verdict of the Federal Court
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  Speaker 1: in a big win for watchdog, the Australian Competition and
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  Speaker 1: Consumer Commission. Now the a triable C is coming after
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  Speaker 1: rival Woolies and grocery suppliers. So how will retailers react
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  Speaker 1: and what will it mean for prices at the checkout.
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  Speaker 1: Our reporter Angelicus Nodeen is here in just a moment.
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  Speaker 2: The Federal Court of Australia has ruled that Cole's was
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  Speaker 2: found to have misled customers with its downtown promotion. The
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  Speaker 2: A Trible Ced took the supermarket giant to court over
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  Speaker 2: accusations they used fake discounts by artificially inflating prices and
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  Speaker 2: then dropping them back down.
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  Speaker 1: The A Triple Seed took the matter at a court.
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  Speaker 1: But this case really started with a bunch of social
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  Speaker 1: media salutes who aired their frustrations on TikTok and Instagram.
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  Speaker 3: Chick Coles, it was twelve, it's now ten from seven
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  Speaker 3: dollars fifty.
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  Speaker 1: Here's a product that's fifteen fifty save fifteen fifty. But
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  Speaker 1: if you look at the price history, it's been alternating
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  Speaker 1: between those two prices every seven days, and that's apparently
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  Speaker 1: Dwan down prices are fourteen dollars six up and goes sorry.
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  Speaker 1: Angelica Snowden is a business reporter with The Australian, and
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  Speaker 1: is this what you thought was going to happen?
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  Speaker 4: No, It's not what I thought was going to happen. Claire.
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  Speaker 3: Actually I covered this trial quite closely two weeks in February.
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  Speaker 4: How it ended was essentially the judge was asking some
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  Speaker 4: pretty hairy questions of the a triple C at the end,
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  Speaker 4: including you know, doesn't your case have to fail if
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  Speaker 4: you can't explain how long these discounts need to last
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  Speaker 4: for along those lines, and so obviously what we've heard
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  Speaker 4: is that Coles did mislead consumers with their downtown tickets,
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  Speaker 4: and they're facing some pretty significant fines, and probably in
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  Speaker 4: the court of public opinion, I think perhaps the reputational
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  Speaker 4: damage might be a little bit worse.
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  Speaker 1: It's interesting watching judges in action. When there's no jury.
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  Speaker 1: The judge becomes almost like another one of the lawyers,
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  Speaker 1: interrogating the barristers and asking really often quite provocative questions.
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  Speaker 1: I've often found that the hardest questions that the judge
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  Speaker 1: asks is often all the party who ultimately ends up
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  Speaker 1: going to win, because the judge is testing absolutely everything
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  Speaker 1: needs to make sure that he or she is not
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  Speaker 1: going to make the wrong call here, like testing that
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  Speaker 1: everything is absolutely water tight. It makes for really interesting discussion,
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  Speaker 1: doesn't it. Because you see the barristers having to really
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  Speaker 1: think on their feet.
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  Speaker 3: Absolutely indeed, and that is probably where I went wrong, Clay.
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  Speaker 4: You know, as we.
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  Speaker 3: Also know, Woolworths is facing almost the identical set of
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  Speaker 3: allegations for their prices dropped campaign and their trial concluded
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  Speaker 3: more recently a couple of weeks ago, and Federal Court
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  Speaker 3: Judge Michael O'Brien.
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  Speaker 4: Asked the same set of really.
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  Speaker 3: Difficult ques estions of the HBC's barrister. And while we
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  Speaker 3: don't know the outcome yet in that case, it will
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  Speaker 3: definitely be interesting given what we've just.
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  Speaker 1: Learned having watched both of those cases unfold in the hearings.
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  Speaker 1: And how similar do you think Cole's and Woolli's behavior was.
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  Speaker 4: I think very similar.
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  Speaker 3: I guess we have to think about the period of
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  Speaker 3: time that this conduct occurred in, which was during COVID,
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  Speaker 3: when inflation was spiking, prices were massively rising at all
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  Speaker 3: kind of junctures in our society, whether it be the
• 4:42
  Speaker 3: cost of raw materials to produce things or freight, and
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  Speaker 3: so it makes sense that both of Australia's major supermarkets
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  Speaker 3: would be not only monitoring the prices of each other's
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  Speaker 3: products that are more or less the same, but that
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  Speaker 3: they would have the same motivations to be as can
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  Speaker 3: copetitive as they could with consumers.
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  Speaker 1: It's awfully coincidental, isn't it that, as you say, prices
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  Speaker 1: are often more or less the same. I mean, these
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  Speaker 1: are hugely complex businesses with thousands of product lines. They're
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  Speaker 1: all supposedly negotiating independently with every supplier. So they're both
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  Speaker 1: negotiating with the makers of pepsi, They're both negotiating with
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  Speaker 1: Arnett's biscuits, They're both negotiating with the supplier of capsicums
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  Speaker 1: versus the numb of it though, isn't it How do
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  Speaker 1: those prices end up being so similar so much of
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  Speaker 1: the time. And this case is not about the two
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  Speaker 1: of them being in collusion with each other, but it's
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  Speaker 1: about them watching each other very closely. What do we
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  Speaker 1: learn about how they monitor each other's pricing?
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  Speaker 4: Well, we know.
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  Speaker 3: That's what they do, and I've gone through the judgment
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  Speaker 3: it's about one hundred pages. And what the judge notes,
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  Speaker 3: and what we heard in the trial as well, is
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  Speaker 3: that there are parts of coals and will words that
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  Speaker 3: are dedicated to monitoring the pricing and promotional practices of
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  Speaker 3: each other.
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  Speaker 4: But we also learned that it's quite common for.
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  Speaker 3: The supplier of the product to pitch the same pricing
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  Speaker 3: to most of the major retailers.
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  Speaker 4: I mean that being coals in Woolworths.
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  Speaker 5: The supermarkets are now scrambling to try and gain back
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  Speaker 5: the trust of customers. Now, if the A Triple C's
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  Speaker 5: allegations are true, it is without question misleading and manipulative behavior,
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  Speaker 5: especially during a cost of living crisis.
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  Speaker 1: We've seen some quite startling reporting recently about ALD two
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  Speaker 1: and the idea that Aldi's for in vegetable suppliers were
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  Speaker 1: allegedly colluding on prices of cauliflowers and capsicums, and supplier
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  Speaker 1: A and supply B put their heads together and in
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  Speaker 1: text messages are allegedly colluding about how much they're going
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  Speaker 1: to charge Aldi this giant for of cauliflower. That's part
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  Speaker 1: of the hblec's kind of remit or territory that I
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  Speaker 1: hadn't quite anticipated that they're also not just looking at
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  Speaker 1: the retail price charge to the consumer, but they're watching
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  Speaker 1: wholesale alleged pricing collusion very very closely. Like ALTI doesn't
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  Speaker 1: need them to defend them, do they no?
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  Speaker 3: And that is a really interesting case as well. The
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  Speaker 3: Age of PLEC is also prosecuting that matter. So what
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  Speaker 3: they're talking about there is alleged cartel conduct which is
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  Speaker 3: really serious and again the potential penalties are really serious
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  Speaker 3: in that I should say nothing's been proven, but indeed
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  Speaker 3: the issue about the price of everyday household products is
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  Speaker 3: clearly a priority for the h PRAC, which we know,
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  Speaker 3: you know we've had the price gouging inquiry, we've had
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  Speaker 3: Clearly the federal government has set this as a priority,
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  Speaker 3: broadly being consumer affairs and consumer transparency, particularly with the
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  Speaker 3: big supermarkets. And I think this is a massive scalp
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  Speaker 3: for the HABLEC to have claimed and it's probably feeling
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  Speaker 3: quite buoyd in the sense that we still have wil
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  Speaker 3: West to come and then they've got the separate Aldi
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  Speaker 3: alleged cartel conduct case as well.
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  Speaker 1: What's so intriguing about it too is that we're talking about,
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  Speaker 1: you know, discounts maybe of fifteen cents or seventeen cents
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  Speaker 1: or two dollars twenty five, which if you're thinking about
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  Speaker 1: cartels and collusion, you're not thinking about Cauliflowers and fifteen
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  Speaker 1: cents on the price of a packet of tim Tams.
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  Speaker 1: Are you except now we are.
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  Speaker 4: Yeah. Absolutely. It's kind of crazy when you say cartel.
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  Speaker 4: Maybe you think.
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  Speaker 3: Oil of a movie set in South America.
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  Speaker 4: Maybe I shouldn't say that. I don't know.
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  Speaker 1: Actually, yeah, we're thinking about, you know, weapons smuggling from
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  Speaker 1: Venezuela or something like that. Yeah.
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  Speaker 3: Yes, But obviously what the cartel kind of means is
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  Speaker 3: that groups of people work together to kind of influence
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  Speaker 3: unfairly the price of something.
• 9:02
  Speaker 1: Willworth and Coals are spending a huge amount on barristers
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  Speaker 1: and solicitors, and in Coles's case, that money has not
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  Speaker 1: got them the result that they wanted. No doubt they
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  Speaker 1: would have preferred to settle this matter quietly out of court.
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  Speaker 1: Matters are settled out of court all the time. But
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  Speaker 1: do you get the sense that the AH Trible C
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  Speaker 1: would have been willing to go for that anyway? Or
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  Speaker 1: did they want this big public humiliation moment.
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  Speaker 3: I think the AH Triple C wanted to prosecute this
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  Speaker 3: in court. Coals, at various points throughout the case, has
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  Speaker 3: said in evidence we attempted to ask the Hrible C
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  Speaker 3: at earlier stages including during their investigation, well what are
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  Speaker 3: the guard rails for down down discounts that we should
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  Speaker 3: be following, which indicates that, you know, perhaps they were
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  Speaker 3: trying to do the right thing.
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  Speaker 1: And did the HBLEC help them out or did they
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  Speaker 1: just say, well, you can go and read the legislation
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  Speaker 1: and work it out for yourselves.
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  Speaker 4: More or less yes.
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  Speaker 3: So ultimately, now what we've got is a public judgment
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  Speaker 3: that is I want to say, fairly scathing, I guess
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  Speaker 3: of the behavior that we've seen around the downtown discounts.
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  Speaker 3: What this outcome means is that for the first time,
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  Speaker 3: major retailers will be looking at this and understanding that
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  Speaker 3: they must hold the price of products for three months
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  Speaker 3: before they can claim.
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  Speaker 4: That a discount is applied to it.
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  Speaker 3: In the case of Coals, a number of products like
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  Speaker 3: deodorant baby formula were held for four weeks or less
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  Speaker 3: before they were dropped on a so called discount, which
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  Speaker 3: is ultimately what misled consumers.
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  Speaker 1: Coles has had a win here, and no doubt will
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  Speaker 1: Worths will be taking some hope from this in that
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  Speaker 1: the judge has found that they were not price gouging,
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  Speaker 1: that they were not engaging in what I think we
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  Speaker 1: could probably say would be an unethical overcharging of customers.
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  Speaker 1: The judge said that the price increases came from suppliers,
• 11:02
  Speaker 1: so the supplieres are charging more. That's a complex in
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  Speaker 1: its own way, as we just heard, and so therefore
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  Speaker 1: Coals was charging the customers more. It's about the way
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  Speaker 1: it communicated that to its customers in terms of being
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  Speaker 1: open about what was really happening with the price going
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  Speaker 1: up and down. How significant is that in terms of
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  Speaker 1: a win for Coals.
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  Speaker 3: I think it is really significant. They were responding to
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  Speaker 3: genuine cost price increase requests that they received from their
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  Speaker 3: suppliers during COVID, which, as we discussed, was a period
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  Speaker 3: when there was huge inflation. And throughout the trial we
• 11:38
  Speaker 3: heard evidence from the cookies and biscuits category manager who
• 11:42
  Speaker 3: said this was.
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  Speaker 4: A period of time where we were getting so many.
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  Speaker 3: Cost price increase requests that it was an unusual period
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  Speaker 3: of time in that sense. So I think it is
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  Speaker 3: a win for Coals in that sense. They weren't doing
• 11:57
  Speaker 3: the wrong thing. Their price increases were genuine, That's what
• 12:00
  Speaker 3: the judge found. The only issue is that they didn't
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  Speaker 3: I guess, hold a price. They didn't establish it for
• 12:07
  Speaker 3: long enough before they dropped it on a discount, which
• 12:09
  Speaker 3: is what could have misled consumers.
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  Speaker 1: What do you think is going to be the result
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  Speaker 1: of this in terms of the supermarket's behavior, And one
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  Speaker 1: interpretation of this, potentially if you're a supermarket is that
• 12:22
  Speaker 1: you don't make a big deal about discounting. You try
• 12:25
  Speaker 1: to find some other way to promote your business as
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  Speaker 1: being the one who's nicest to the suppliers, for example,
• 12:31
  Speaker 1: with the friend of the dairy farmer or or something else,
• 12:34
  Speaker 1: or just do a more traditional kind of values ad
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  Speaker 1: campaign like we see airlines, to try to instill some
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  Speaker 1: love for the brand. What do you think about that?
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  Speaker 4: Yeah, I think perhaps the messaging will be different.
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  Speaker 3: Now I'm not a marketing expert, so I don't have
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  Speaker 3: a new jingle at my sleeve either, but I'm sure
• 12:53
  Speaker 3: that most retailers will be eager to avoid this kind
• 12:57
  Speaker 3: of scrutiny from the AGABAC and will take this seriously
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  Speaker 3: and think about how we're going to tell shoppers about
• 13:05
  Speaker 3: the value that they can get from our stuff.
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  Speaker 1: Angelicus nodan thank you very much.
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  Speaker 4: Thanks Claire.
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  Speaker 1: Angelicus Noden is a business reporter with the Australian. You
• 13:20
  Speaker 1: can check out all andres reporting plus analysis from our
• 13:24
  Speaker 1: experts right now at the Australian dot com dot au