By Dalinee Bangaroo, Trade Mark Attorney/Solicitor and Matt Hansen, Partner

Monday, 1 June 2026

On 14 May 2026, the Federal Court of Australia delivered one of the most consequential consumer law judgments in recent years, finding that supermarket giant, Coles Supermarkets Australia Pty Ltd (Coles) misled consumers through aspects of its long-running “Down Down” pricing campaign. You may recall our earlier article published in September 2024, in which we delved into the alleged pricing conduct by Coles and the Australian Competition and Consumer Commission (ACCC) seeking relief from the Federal Court against Coles for breaching sections 18 and 29(1)(i) of the Australian Consumer Law (ACL).

The case has been decided, and Justice Michael O’Bryan’s ruling provides a detailed answer to the question that has troubled retailers and regulators for years: “When does a “discount” cease to be genuine and become misleading under the ACL?”

The ACCC’s Case Against Coles

The ACCC alleged that between February 2022 and May 2023, Coles made misleading representations to consumers with comparative “was/is” pricing across approximately 245 ordinary grocery products. According to the regulator, Coles sold these products at one price for an extended period of time, in some cases 1 or 2 years, with a “Down Down” price, then increased their price for an average of 28 days and labelled them with a standard white label price, before then lowering the price again (albeit still higher than the prior “Down Down” price) and then advertised those products as being “Down Down” again, even where the “discounted” price was higher than, the earlier long-term “Down Down” price, and advertised as lower comparative to the only briefly available white label price.

The Court scrutinised 14 promotional “Down Down” tickets and Justice O’Bryan ultimately found that 13 of the 14 tickets misled consumers based on increased prices that had not been available long enough to be considered as established. The one undisputed ticket did not include a previous “was” price on the “Down Down” ticket, and thus was not considered misleading by the Court.

The legal issue was not whether the higher “was” price had actually existed but rather, whether consumers were misled into believing the higher price was a genuine long-standing and established selling price from which a meaningful discount had been offered.

The Court’s Reasoning

The Court acknowledged that all price increases reflected legitimate supplier cost pressures during a period of elevated inflation and were therefore commercially justifiable. Importantly, the Court did not find that Coles engaged in “price gouging” or fabricated prices entirely.

However, the Court concluded that the promotional conduct was nevertheless misleading because the temporary higher prices had been maintained for too short a period to create a genuine comparison between the lowered price and the higher price.

Justice O’Bryan held that ordinary consumers would likely infer from the promotional tickets that:

• the “was” price represented the prevailing or usual recent selling price; and
• the “Down Down” price reflected a genuine discount providing them real savings in their purchases of essential products.

The Court found that impression to be misleading in the circumstances.

The Emerging “12-Week Principle”

Perhaps the most commercially important aspect of the judgment is Justice O’Bryan’s comment, which may not constitute binding law but nevertheless highly influential for future cases and compliance practices.

Justice O’Bryan held that the “Down Down” representations may not have been misleading if the products had been sold at the higher “was” price for a substantially reasonable period. Although this is not a rule of thumb, the judge suggested that a minimum period of approximately 12 weeks may have been sufficient to establish the higher price as a legitimate reference point for comparative advertising.

This observation is highly significant. However, what constitutes a ‘reasonable period’ of price stability will vary from product to product and on the facts of each case.

Importantly, Coles’ internal policies, referred to as ‘guardrails’, initially mandated that products be sold at the ‘was’ price for a minimum 12-week period, however this policy was subsequently relaxed to 4 weeks following increased inflationary pressures and perceived competitive pressure from Woolworths Group Limited (Woolworths). Justice O’Bryan observed that had Coles complied with their own internal policies, they could have successfully justified their actions.

Internal Compliance Under Scrutiny

Another important aspect of the ruling was the Court’s focus on internal compliance processes.

Justice O’Bryan was critical of Coles’ shift for relaxing its guardrails. The ruling demonstrates that Courts are increasingly willing to examine not only external advertising representations but reinforce the importance of documenting pricing rationale, maintaining defensible promotional policies, and ensuring legal oversight of comparative advertising strategies.

This decision is also likely to embolden the ACCC which has made misleading pricing and ‘dark pattern’ conduct a major enforcement priority in recent years.

Potential Penalties and Future Proceedings

The 14 May 2026 Federal Court judgment dealt with liability only and penalties will be forthcoming.

However, Coles could theoretically receive a maximum fine of up to $650 million (at $50 million for each of the 13 misleading “Down Down” tickets) depending on the Court’s interpretation of the contraventions.

The judgment may also influence related proceedings involving Woolworths, which faces similar allegations from the ACCC in a separate action. Justice O’Bryan is expected to deliver judgment in that matter later in 2026.

Meanwhile, a class action lawsuit will seek compensation for Coles shoppers who purchased the products covered by the case between February 2022 and May 2023.

Conclusion

This ruling against Coles represents a major development in Australian consumer law and retail compliance. While the judgment does not forbid comparative pricing or promotional discounting, it signals that short-lived price increases designed primarily to facilitate future “discount” advertising may expose retailers to substantial legal risk.

For businesses, the message is straightforward: discount advertising must reflect genuine consumer savings, not merely pricing mechanics capable of creating the illusion of value. For comparative price comparisons to be genuine, the “was” price must be established and sold within a reasonable period of time taking into account the period prior to any price change, as well as the period for which the discount applies. Although “reasonable” is subjective, a guideline of 12 weeks is prudent, and steps must always be taken to ensure that the discounted price is not offered for longer than the “standard” price, so as to not undermine any establishment period.

Contact Us

Although this case concerns supermarket pricing, its implications extend far beyond the grocery sector. If you are considering initiating a promotional campaign, it is important to carefully consider its implementation, the impact it will have on consumers and competitors, and ensure that your internal policies are compliant under the ACL. If you would like further information on Competition Law and your obligations under the ACL, please contact one of our experts below.