Two Federal Court cases are about to define what “discount” legally means in Australia — and the ruling will reach well beyond the two supermarkets currently in the dock. Every retailer in the country is watching, and they should be.
The Australian Competition and Consumer Commission (ACCC) is mid-trial in its case against Woolworths over “prices dropped” promotions, following a separate action against Coles heard in February. Both cases allege the supermarket giants misled shoppers with discounts that were, in the ACCC’s own framing, illusory. The combined potential penalties run into the hundreds of millions of dollars, and two consumer class actions are already queued behind the verdicts.
What the ACCC’s Illusory Discount Argument Actually Means for FMCG
The ACCC’s core argument is commercially straightforward, even if the legal test is not. When a product sits at a stable price for 180 days or more, gets quietly lifted by at least 15 per cent for 45 days or less, then drops back below that inflated price and gets labelled a “discount” — the ACCC says that’s misleading.
The problem is that the new “discounted” price is often the same as, or higher than, the original long-running price. Shoppers see a ticket that says “prices dropped” and reasonably assume the price is lower than it was before. The ACCC says that assumption is being exploited.
This matters for the broader FMCG sector because Woolworths and Coles together account for roughly two-thirds of all Australian supermarket sales. The promotional mechanics under scrutiny here are not unique to these two retailers.
Inside the Woolworths Federal Court Case
The current Woolworths trial is focused on 12 everyday products drawn from a longer ACCC list of 266 items. The products include Tim Tams and Tiny Teddy biscuits, Fab laundry powder, and Kleenex Aloe Vera tissues — familiar shelf staples that most Australian households buy regularly.
Woolworths’ defence, led by barrister Robert Yezerski SC, argues the “prices dropped” labels were literally accurate. The price did drop — from the recently raised price. The supermarket also contends that Australian consumers, living through a period of well-documented inflation, understood that prices fluctuate and would not have assumed a “prices dropped” ticket referred to a long-term historical price.
The Oreos example from the trial illustrates the tension clearly. A pack that had long sold for $3.50 was raised, then “dropped” to $4.50 — still $1 above the original price, but labelled as a discount. The ACCC says that’s the illusion. Woolworths says the label was factually correct.
| Case | Promotion Alleged | Products in Focus | Trial Status | Penalty Exposure |
|---|---|---|---|---|
| ACCC v Woolworths | “Prices dropped” labels on items with temporarily inflated base prices | 12 products from 266 identified, including Tim Tams, Fab, Kleenex | Underway — judgment pending | Potentially hundreds of millions of dollars |
| ACCC v Coles | “Down down” discounts on items with temporarily raised prices | Multiple SKUs across grocery categories | Heard February 2026 — judgment pending | Potentially hundreds of millions of dollars |
Both cases are before Justice Michael O’Bryan. No date has been set for either judgment.
The Penalty Structure That Makes This Commercially Significant
The alleged contraventions occurred in 2021–22, a period when Australian Consumer Law penalty provisions were significantly strengthened. The maximum penalty per contravention rose from $10 million to the greater of $50 million, three times the benefit obtained, or 30 per cent of adjusted turnover during the breach period.
With hundreds of products and thousands of individual promotions potentially in scope, the aggregate exposure is substantial. The ACCC has confirmed it is seeking a significant penalty if it wins, along with community service orders directing funds to meal-delivery charities.
I think it’s worth understanding the precedent here. A decade ago, the ACCC took on both supermarkets over unconscionable treatment of suppliers. Coles settled and paid $10 million. Woolworths went to court and won. Despite those different outcomes, the cases still produced a binding Food and Grocery Code of Conduct, which came into effect last year. The pattern suggests that even a partial loss for the ACCC can shift industry behaviour.
What These Cases Will Not Resolve
A judgment in favour of the ACCC would not automatically trigger consumer refunds. The two class actions waiting in the wings would need to run their own course for that outcome, and those proceedings carry their own timelines and evidentiary burdens.
Nor would an ACCC win immediately rewrite every retailer’s promotional playbook. Retailers would need time to audit and restructure their discount mechanics, and the practical definition of a compliant “reference price” would likely require further regulatory guidance before the industry could act with confidence.
Suppliers and brand owners should also note that these rulings address retailer conduct, not supplier pricing decisions. The cases do not directly affect how manufacturers set wholesale prices or negotiate promotional funding with buyers.
Brand managers and category leads at major FMCG suppliers stand to benefit most from an ACCC win — particularly those whose products have been used in promotional mechanics that inflate the perceived discount. Clearer rules on reference pricing would reduce pressure to fund promotions that deliver less consumer value than the ticket implies. The timeline for any practical change depends entirely on when Justice O’Bryan delivers his judgments.
What the Verdict Means for Australian Retail Advertising Standards
These cases sit inside a broader pattern of regulatory pressure on Australia’s supermarket duopoly. The binding Food and Grocery Code addressed supplier treatment. These cases address consumer treatment. Together, they represent a sustained effort to apply harder legal standards to how the two dominant retailers operate at shelf level.
If the ACCC wins, every major Australian retailer — department stores, pharmacies, electronics chains — will need to review how they construct and communicate promotional discounts. The ruling would effectively set a new floor for what truth in advertising requires in a retail context, and the FMCG brands whose products sit on those shelves have as much at stake as the supermarkets themselves.
Justice O’Bryan’s judgments will draw a line the entire retail sector has been waiting on. If you’re a brand manager, buyer, or category lead, now is the time to review how your promotional pricing mechanics are structured — because the rules governing them are about to be written in court.