The price of belief: Woolworths, the ACCC and the illusion of savings 

“Anyone else noticed … Woolworths … raising then lowering their prices just so they can whack a big PRICES DROPPED tag on the shelves?” one Reddit user wrote in May 2023. Another noted that “Frosty fruits went from $5 to $7.50, down to now $6. Might report to ACCC.” It did not begin in a courtroom but in fragments of what Media Watch called “online sleuths”, shoppers who had started to watch the price tags more closely. The Australian Competition and Consumer Commission would later allege that the supermarket group temporarily increased the prices of at least 266 different products before presenting discounts that were, in its words, “illusory”.Woolworths disputes this, and, in its concise statement response, argues that the period in question was marked by “considerable inflation with significant cost pressures on suppliers”, and that it was “responding to cost prices increased at four to five times the rate received pre-Covid”. The retail case of the decade, already grasping Coles earlier this year with an almost identical case over questionable price-drop promotions, is playing out in further detail. Michael Hodge KC, a prominent barrister historically associated with defending class actions, is acting for the ACCC and told the court the products in question breached Woolworths’ own internal guardrails. He added that the power of the price dropped label was that it beckoned something extraordinary – a framing Woolworths rejected. Extraneous to the legal issue is another question of consequence. Dr Meg Elkins, a behavioural economist at RMIT University, described the case as an historic moment in a podcast. “This is possibly one of the biggest cases the ACCC has got against these supermarkets, and maybe there are others to come. It’s a watch this space,” she said. She warned that fines would perhaps be significant if proven to be true and pointed to reputational damage and potential exposure to class-action lawsuits. The case, she said, is “putting all other businesses on notice that if you don’t have genuine discounts, we’re watching you”. The scale of this also reflects the structure of the market itself. Retail analyst, Dean Salakas pointed to leverage Woolworths and Coles have over suppliers, noting “for some of these businesses, it can be 80 per cent of their business, the leverage they have is massive”. The dependence of these relationships shapes how pricing decisions are made before a product reaches the shelf. So if that relationship disintegrates, the consequences can be immediate. “If these companies lose this tender, they go out of business. They have to do whatever it takes to get the deal.” In other words, suppliers can absorb cost pressure or concur to pricing that allow retailers to maintain promotional activity. The ACCC’s own supermarket inquiry has found Coles and Woolworths are among the most profitable globally, with margins rising over recent years. What happens next will not be confined to Woolworths alone. Ahead of a speech earlier this year, ACCC chair Gina Cass-Gottlieb said Australian consumers had lost faith in businesses and regulators. She said the watchdog’s priorities recognise pressures facing households and businesses and the necessity for evidence-based, proportionate regulatory responses. At the same time, Salakas noted the uneven nature of scrutiny. “The bigger guys are essentially targets. The smaller guys avoid the scrutiny. I’d say it’s happening more at smaller retailers.” With that context, the outcome of the case may be only part of its impact. “Just the questions they ask do damage, whether they’re right or wrong,” Salakas said. Legal experts also suggest the regulator has already achieved part of its objective simply by running the case. Whether Woolworths ultimately wins or loses, the line has been drawn in public.