Court Rules Coles Surges in Fake Discount Scandal

By VirentaNews Staff — May 14, 2026

Did one of Australia’s largest supermarket chains deceive millions of shoppers by inventing fake discounts? That’s the question now facing consumers, regulators, and the retail sector after a landmark Federal Court ruling found Coles Supermarkets engaged in misleading pricing practices. The decision, delivered in mid-2023, concluded that Coles had advertised products as being on sale with inflated ‘discounts’—often comparing current prices to higher ones that were either brief, unrealistic, or never actually in effect. With Australians already grappling with rising cost-of-living pressures, the verdict has intensified scrutiny over how retailers set and advertise prices. The case has not only raised legal and ethical questions about consumer trust but also exposed systemic issues in retail marketing that may extend beyond a single company.

What the Court Found About Coles’ Pricing Tactics

The Federal Court of Australia ruled that Coles engaged in misleading and deceptive conduct under the Australian Consumer Law by falsely representing the value of discounts in its ‘Price Drop’ and ‘Was’ pricing campaigns. Between July 2017 and December 2022, Coles advertised thousands of products as being on sale by showing a higher ‘original’ price next to a lower ‘new’ price, implying substantial savings. However, the court found that the ‘original’ prices were often only in place for a short time before the ‘discount’ was introduced—sometimes just days—or that the prices were set artificially high to exaggerate savings. The Australian Competition and Consumer Commission (ACCC), which brought the case, argued that Coles created an illusion of savings that did not reflect genuine price reductions. Justice Michael Lee concluded that these tactics were “systemic” and “designed to influence consumer behavior,” breaching consumer protection laws.

Supporting Evidence and Regulatory Backing

The ACCC presented extensive data showing that for over 250 products, the ‘original’ prices used in Coles’ advertising bore no resemblance to the typical market value. For example, Coles advertised a packet of biscuits with a ‘was’ price of $4, lowered to $2.50, but the product had only ever sold for $2.50 or less in the months prior. In another case, a blender was shown with a ‘before’ price of $80, reduced to $50—yet internal Coles documents revealed the $80 price was set specifically for the ad campaign and had never been the actual selling price. According to the ACCC, such practices were widespread and calculated. The ACCC stated that Coles’ actions undermined fair competition and eroded consumer trust. Expert testimony from behavioral economists also highlighted how such pricing cues—like ‘was’ and ‘now’ labels—exploit cognitive biases, leading shoppers to perceive greater value even when no real discount exists. This psychological manipulation formed a core pillar of the court’s reasoning.

Counter-Perspectives and Industry Pushback

While the court’s ruling was decisive, some retail analysts argue that Coles’ practices were consistent with common promotional strategies across global markets. They contend that dynamic pricing—adjusting prices based on demand, competition, or marketing goals—is a standard tool in modern retail and that Coles merely exercised pricing flexibility. Some critics suggest the ACCC’s case sets a risky precedent, potentially criminalizing routine promotional tactics like temporary price hikes before sales. Others point out that consumers are increasingly savvy, with price comparison apps and greater transparency reducing the impact of such strategies. Coles itself defended its actions by stating that it acted in line with industry norms and that the ‘was’ prices reflected legitimate pricing decisions, even if short-lived. However, the court rejected this argument, emphasizing that compliance with industry practice does not excuse misleading conduct under consumer law.

Real-World Impact on Consumers and Markets

The ruling has far-reaching implications for Australian shoppers and the retail sector. With Coles and its main rival Woolworths currently under similar scrutiny—Woolworths is facing a parallel ACCC lawsuit over identical practices—there is growing pressure for industry-wide reform. The decision may lead to significant financial penalties; under Australian law, companies can be fined up to $50 million per breach. Beyond fines, the case could force supermarkets to overhaul their pricing and advertising strategies, potentially making promotions more transparent. Consumer advocacy groups have welcomed the verdict as a win for fairness, arguing that honest pricing helps families make informed choices, especially during inflationary periods. Retailers may now face stricter compliance requirements, and the ACCC has signaled it will continue monitoring pricing claims across sectors, from electronics to fashion.

What This Means For You

If you shop at major supermarkets, this ruling underscores the importance of skepticism toward advertised deals. Just because a price is labeled as ‘reduced’ doesn’t mean it’s a true bargain. Comparing prices over time, using independent tracking tools, or checking historical data can help avoid being misled. The case also highlights the power of regulatory oversight in protecting consumer rights. As enforcement increases, you may see clearer, more honest pricing in stores and online. Ultimately, transparency benefits everyone—shoppers get real value, and ethical businesses gain a fairer competitive environment.

Will this ruling trigger a broader crackdown on deceptive pricing across other retail sectors, from fuel to fashion? And how will global retail giants adapt their marketing strategies in response to stricter consumer laws in Australia and beyond? As regulators gain momentum, the definition of a ‘sale’ may finally be held to a higher standard.

Source: BBC