Australian competition regulator sues Woolworths, Coles over discount claims by Investing.com

Investing.com– Australia’s competition watchdog said it has launched legal proceedings against supermarket giants Woolworths Ltd (ASX: ) and The Coles Group (OTC:) Ltd (ASX:) for allegedly misleading consumers about price cuts.

The Australian Competition and Consumer Commission alleged that both parties falsely claimed to be offering discounts on “hundreds” of supermarket products, first raising prices and then placing the items in discount categories at the rates seen before the increase.

Woolworths practiced this by promoting “low prices”, while Coles did the same by promoting “down”.

“…Woolworths and Coles each breached the Australian Consumer Law by making misleading claims about discounts when the discounts were, in fact, illusory,” ACCC chairwoman Gina Cass-Gottlieb said in a statement.

The watchdog said it conducted an investigation into the case and found that the two violated the consumer law for several common items, including chocolate, soft drinks and other household goods.

It was not immediately clear how much the ACCC was seeking in fines, although the watchdog said the maximum penalty for each breach of consumer protection law could be as much as $US50 million ($34 million). .

Woolworths and Coles have seen their earnings fall steadily in recent years as Australian consumers cut back on spending amid pressure from high inflation and interest rates. The environment has also made Australian shoppers much more budget conscious.

Woolworths and Coles could not immediately be reached for comment.