Why did the Federal Court find Coles (ASX:COL) misled consumers?

The court ruled that Coles engaged in deceptive "Down Down" promotions by briefly hiking prices before "discounting" them to a level that was often higher than the original price.

What specific pricing tactic did Coles (ASX:COL) use to deceive shoppers?

Coles used a tactic where they increased the price of a product for a short period and then lowered it, labeling the new price as a "Down Down" discount. Because the higher "was" price was not maintained for a reasonable duration—deemed to be at least 12 weeks in this case—the subsequent discount was considered misleading.

How does the court ruling against Coles (ASX:COL) affect Woolworths?

While this specific ruling targets Coles, the Australian Competition and Consumer Commission (ACCC) has brought similar charges against Woolworths for nearly identical pricing strategies.

What are the immediate financial risks for Coles (ASX:COL) shareholders?

While the court has established liability, the exact financial penalties have not yet been determined and will be decided in a separate hearing. Investors should prepare for potentially significant fines that could impact NPAT (Net Profit After Tax) and short-term cash flow.

Does this ruling change the long-term investment thesis for Coles (ASX:COL)?

The ruling introduces a "bear point" regarding Coles’ ability to use aggressive marketing to drive volume and protect margins during inflationary periods. If the company is restricted in how it labels discounts, it may lose some competitive edge in a price-sensitive market.

Court finds Coles misled shoppers with discounts

Written by Isaac FrancisPublished May. 14 2026Last Updated May. 14 2026

In a ruling delivered in the Federal Court, Justice Michael O’Bryan has found that supermarket giant Coles (ASX:COL) misled consumers through its pervasive "Down Down" promotional campaign.

The decision follows a rigorous legal challenge spearheaded by the Australian Competition and Consumer Commission, which alleged that the retailer engaged in deceptive pricing strategies that manipulated consumer perceptions of value.

The court’s findings focused on a series of "price drops" where products were advertised as discounted despite recently being sold at lower prices.

Justice O’Bryan concluded that for 13 of the 14 sample products presented in the case, Coles had failed to maintain the "was" price for a reasonable duration—specifically at least 12 weeks—before claiming a discount.

By briefly inflating prices only to "lower" them shortly thereafter, the supermarket created a false impression of genuine savings.

In his judgement, Justice O’Bryan noted that the tickets were misleading because the products had not been established at the higher price point for a sufficient period to justify the promotional claims.

The tactic effectively meant that shoppers were, in several instances, paying more than they had in the preceding months, despite the presence of bright discount signage.

The ACCC, which brought similar charges against Woolworths, has hailed the result as a victory for transparency in the Australian retail sector.

While the court has established liability, a separate hearing will be scheduled to determine the financial penalties Coles will face for these systematic breaches of consumer law.