In mid-November 2024, Gerard Malouf & Partners initiated a class action lawsuit against Coles and Woolworths, two of Australia’s largest supermarket chains. Filed in the Federal Court of Australia, the lawsuit accused retailers of deceiving consumers with their well-known “Prices Dropped” and “Down Down” promotional campaigns.

The allegations, already under investigation by the Australian Competition and Consumer Commission (ACCC), suggest that both supermarket chains misrepresented their pricing strategies. According to the ACCC, the campaigns implied significant price reductions, but many products were sold at regular prices for extended periods before the promotions. Prices were temporarily increased for short periods before being placed on “Prices Dropped” and “Down Down” promotions.

The class action seeks to recover the difference between the advertised “discounted” prices and the actual standard prices. Customers who purchased affected items between February 2022 and May 2023 at Coles and between September 2021 and May 2023 at Woolworths could claim refunds of up to 1,300 Australian dollars (approximately 840.25 US dollars).

Coles and Woolworths denied wrongdoing and expressed their intent to defend the claims. Woolworths stated its commitment to challenging the class action, while Coles reiterated its defence against similar proceedings brought by the ACCC earlier this year.

Despite these legal battles, investor confidence in the supermarkets remains relatively steady. Following the lawsuit’s announcement, Woolworths’ shares rose by 1.1%, and Coles saw a 1.2% increase, marking notable intra-day gains.

Public sentiment, however, appears less favourable. An interim report from the ACCC, released in September 2024, highlighted growing consumer distrust toward both retailers. Many Australians expressed feeling misled by the promotions.

This lawsuit contributes to the increased scrutiny faced by Coles and Woolworths amid a year-long government inquiry launched by Prime Minister Anthony Albanese in January 2024. The inquiry aims to assess the retailers’ market dominance and investigate barriers to competition, signalling a potentially turbulent year ahead for the supermarket giants.