Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), is suing the country’s two largest supermarket chains, Coles and Woolworths, accusing them of misleading customers with false claims about permanent price reductions on hundreds of products. The ACCC alleges that both companies temporarily raised prices before lowering them to amounts equal to or even higher than the original prices, violating consumer law.

Coles announced it would defend itself against the allegations, while Woolworths said it would review the claims. Together, the two supermarket giants control two-thirds of Australia’s grocery market and have faced growing scrutiny over accusations of price gouging and anti-competitive practices.

Prime Minister Anthony Albanese condemned the alleged behavior, saying, “If true, this is completely unacceptable. Customers don’t deserve to be treated as fools.” He also introduced draft legislation for a new supermarket “code of conduct,” previously promised by the government.

ACCC Chair Gina Cass-Gottlieb explained that both companies have long promoted their “Prices Dropped” and “Down Down” campaigns, which shoppers believe represent long-term price reductions. However, in many cases, the discounts were “illusory,” she said.

The ACCC’s investigation, prompted by consumer complaints and its own monitoring, found that Woolworths misled customers on 266 products over 20 months, while Coles did the same for 245 products over 15 months. These products ranged from household staples like pet food and mouthwash to popular Australian items such as Arnott’s Tim Tam biscuits and Bega Cheese.

The ACCC estimates that the supermarkets sold “tens of millions” of these products, generating significant revenue. Cass-Gottlieb emphasized that, during a time of rising living costs, “it is critical that Australian consumers can rely on the accuracy of pricing and discount claims.”

The ACCC is seeking significant penalties from the Federal Court and is calling for an order requiring both companies to expand their charitable meal delivery programs.

Coles responded, stating that rising costs forced product price increases, but it had “sought to strike an appropriate balance” by resuming promotions as soon as possible. Woolworths, in turn, said it would cooperate with the ACCC, emphasizing that customers expect meaningful value and transparency.

In response to growing concerns, the government commissioned a review of Australia’s existing Food and Grocery Code of Conduct. The review recommended a stronger, mandatory code, enforced by the ACCC, to protect both suppliers and consumers, with heavy penalties for any breaches.