The Australian Competition and Consumer Commission (ACCC) has launched legal action against supermarket giants Coles and Woolworths, accusing them of deceiving customers with false discount claims. The ACCC alleges that both retailers inflated prices on numerous items before discounting them, creating the illusion of a bargain.

Gina Cass-Gottlieb, Chair of the ACCC, said the regulator is seeking hefty financial penalties and community service orders that would require both chains to fund charitable meals for Australians in need. “It’s crucial that consumers can trust the accuracy of pricing and discounts, especially in the face of rising cost-of-living pressures,” she stated.

According to the ACCC, products such as chocolate biscuits and coffee were subject to price hikes for short periods before being marked down. One example involved Woolworths increasing the price of a 370g Oreo family pack from $3.50 to $5 for 22 days, only to drop it to $4.50, falsely promoting it as a discount. In reality, the new price was still 29% higher than its previous regular price.

Both Coles and Woolworths have defended their pricing strategies, with Coles attributing the increases to supplier costs, while Woolworths pledged to review the ACCC’s claims. Despite their defense, shares in both companies dropped over 3.5% following news of the lawsuits.

Prime Minister Anthony Albanese has also weighed in, condemning the misleading discounts as “unacceptable” and contributing to inflationary pressures. “Discounts should be genuine,” Albanese said, noting how important it is for households to manage their budgets as food prices continue to rise.

This lawsuit is part of a larger push by the ACCC to regulate supermarket pricing practices, with Coles and Woolworths controlling around two-thirds of Australia’s grocery market. The outcome of this case could have significant consequences for retail pricing regulations in the country.