Did Coles and Woolies con customers?
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What is the main topic discussed in this episode?
I'm Daniel James and you're listening to 7am. Tim Tams and Tiny Teddies aren't usually the stuff of federal court cases, but product by product, dollar by dollar, the ACCC has been building its case against supermarket giants, Coles and Woolworths, over what it claims were fake discounts. Now both cases have wrapped and the judge is reviewing the evidence. With inflation and grocery prices soaring, the timing couldn't be more crucial. Today, Chief Economist at the Australian Institute, Greg Jericho, on the case against the supermarket giants and its implications for Australian shoppers.
What is the case against Coles and Woolworths about?
It's Tuesday, May 12th. Greg, the ACCC has now wrapped its case against Woolworths. The judge is due to hand down his findings against both Woolies and Coles later this year. Can you start by reminding us what the supermarket giants were accused of?
Yeah, basically the ACCC is accusing them of deceptively pricing items, suggesting that they're on sale, whereas in reality they were not real sales.
How are supermarkets accused of misleading pricing?
So what the case with Woolies is focused on is... A dozen or so items out of a big long list of items that the ACCC found. Things like, we're talking Tim Tams and Fab and Tiny Teddies and all these other items. All the good stuff. All the good stuff.
Woolies sold the Oreo family pack at a regular price of $3.50 for almost 700 days. Spiking to $5 for just 22 days, it was then added to its prices dropped line at $4.50.
Yeah, a good example is FAB where the ACCC are basically saying that for 425 days, a two-kilogram pack of FAB was $7. And then for 19 days, Woolies raised the price of that to $14. and then announced, oh, it's on sale at $8.
What defenses do Coles and Woolworths have against the allegations?
And the ACCC is saying, really? Actually, what you've done is raised it from $7 to $8, but you just put in a little 19 days at a higher price so that you could say it's on sale, it's a price cut. And Woolies and Coles did this for a range of items where for a long time it would be at a certain price, They'd raise it for a couple of weeks, maybe three weeks, and then drop it to a higher price than it had been previous, but below that sort of short-term price. And the accuracy is saying, look, that's not a real sale.
What could be the implications if the ACCC wins the case?
That's you manipulating the system.
The ACCC alleges that the price discounts as promoted were misleading because the discount was illusory. In addition, the ACCC alleges that in many cases, Woolworths and Coles planned the temporary price spike in order to establish a new higher-was price for their was-now price discount promotions.
So what was Woolworths' defence to these allegations?
Well, what was the say? Well, it is a sale, though. It was $14. Now it's $8. It has been dropped. We're not lying.
How does inflation affect supermarket pricing strategies?
Woolies argue suppliers drove the price hike, stating, following COVID, there was a period of extraordinary inflation. At no stage did we mislead or deceive our customers.
people know that prices go up, things don't stay steady for all time. And so how long should we have to keep it? You know, we kept it up at this high price for a good period of time. And then we legitimately did drop it. And when we say on the price tag that yes, like for fab, we dropped it from $14 to $8. Well, that is actually what happened.
What happens if the ACCC wins this case? What will it mean for Coles and Woolworths?
What role does competition play in the supermarket industry?
And what are the implications more broadly? I'm tipping Greg, this is probably one of the biggest cases the ACCC has sort of brought forward.
Yeah, it is a huge one, especially because of who we're dealing with here. I mean, we're not just... This isn't a corner store. This is everyone's corner store.
If this is found to be true, it's completely unacceptable. This is not the Australian spirit. Customers don't deserve to be treated as fools by the supermarkets.
Coals and woolies dominate the supermarket industry. But the good thing is it will have broader implications for all businesses.
What are divestiture powers and how could they impact the market?
No one else will be able to do this if the ACCC wins.
We're seeking a significant penalty. This is serious conduct that is of great concern to us that affected many consumers with millions of products sold subject to this practice.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:01–0:46
2
What is the case against Coles and Woolworths about?
0:46–1:21
3
How are supermarkets accused of misleading pricing?
1:21–2:17
4
What defenses do Coles and Woolworths have against the allegations?
2:17–2:54
5
What could be the implications if the ACCC wins the case?
2:54–3:32
6
How does inflation affect supermarket pricing strategies?
3:32–4:13
7
What role does competition play in the supermarket industry?
4:13–4:52
8
What are divestiture powers and how could they impact the market?
4:52–17:39
Speakers
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