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While these allegations have been made in relation to a fraction of the thousands of products sold in a typical supermarket, it won’t do much to placate customers’ perception that they have been duped.

“The ACCC alleges that the supermarkets offered certain products at a regular price for at least 180 days. They then increased the price of the product by at least 15 per cent for a relatively short period of time, and subsequently placed it onto their ‘Prices dropped’ or ‘Down Down’ program.”

The regulator further alleges the display of the “Prices Dropped” and “Down Down” labels was misleading, as the price of the products was, in fact, higher than, or the same as, the regular price at which the supermarket had previously offered them for sale.

For almost a year, Labor, the Coalition and the Greens have been belting the two big supermarket chains with claims of price gouging and for the lack of meaningful competition. It is worth noting that the ACCC is not alleging the two supermarkets engaged in collusion or anticompetitive conduct.

The implications of this ACCC action for the supermarket giants cannot be overstated.

The ACCC’s action doesn’t claim price gouging either, which has been a big feature of the discussion on Australia’s concentrated grocery market but is perfectly legal because retailers are allowed to set prices at whatever level they choose.

Rather, the ACCC is claiming that consumers have been misled with the discounting mechanism, diminishing their ability to make informed choices about their essential purchases.

Coles, which is defending the claim, said the allegations related to a time of significant inflation when it was being hit by cost increases from its suppliers. Meanwhile, Woolworths acknowledged the ACCC’s action and said it would review the claims.

It is almost impossible to gauge the potential financial impact on the supermarkets. Each breach after November 10, 2022, can potentially attract a penalty of $50 million.

But the senior management at both supermarkets have a far bigger problem to contend with than just dollars and cents. The ACCC’s allegations will not only widen the growing distrust between the public and the supermarkets, it will also galvanise the voices baying for decisive regulations to hit Woolworths and Coles where it really hurts.

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