I'm Daniel James and you're listening to seven AM. Back in twenty twenty four, the Age People See announced it would take Colds and Woolworths to court over what it says where fake discounts for more than five hundred everyday products. If illow tip offs from citizens lose. We've been documenting curious price changes on everyday products like chocolates and pasta. Now that case is in federal court, with the watchdog arguing Coals misled customers with its down down promotions, increasing
prices just before discounting them again. Coals denies and did anything wrong, putting the price jumps down to rising costs. A separate case against wil War's over its price dropped promotions is expected to follow later today, we're bringing you an episode from twenty twenty four where Ruby Jones speaks with economist and journalist Peter Martin about the reckoning facing
Australia's two biggest supermarkets. Is Sunday, February twenty two. This episode was first published in October twenty twenty four.
Peter, let's begin by talking about how this legal case was built. Where did the a troble seize investigations.
Begin Initially it got phone calls. Now it gets a lot of phone calls, and it has a lot of discretion about what to investigate. In fact, most of the things it gets it never investigates. In this instance, there were so many that it looked further, and when it looked further, it discovered social media. Hundreds of posts from I don't know if you call them citizen data analysts or citizen data journalists.
Colsm Wolworth. Pricing is fascinating, and I've got a really great example.
One was from a guy called prist check guy. Now, one post on TikTok about Cadbury Caramelo koalas has been viewed three hundred and seventy three thousand times.
Okay, I'm actually a little bit upset by this product, and I tell you why. Here was a product that was consistently one dollar discounted to eighty cents, one dollar discounted to eighty cents, and in one day it just jumped up to two dollars. So now it's two dollars discounted to one dollar, and calls is calling that a half priced.
That's what the a triple C saw. But then it was able to as it has the power to do seek data from the parties in this case Coles and Morwitz. Now it can only do that legally, normally if it's preparing a legal action. So they knew something was coming because the A Triple C has been going through the data on their computers for some time.
Okay, so the A Triple C has been trolling the data. So what has it said that it's uncovered about just how many times these kinds of promotions were happening.
It's presented five hundred odd cases. It could have presented more, but it said that it's wanted to only look at cases where prices had been steady for at least six months before the action. What happened in the action was an increase of a few weeks and then prices being discounted to a price that was no lower than the price had been for months before. And the products of the kind we all use aren't It's Timtams Kellogg Cereal
stay free pads. Those are some of the ones for Warlworths Energizer, batteries, for coals, liber tampons, Ness Cafe, instant coffee. If the A Triple C can establish that people took them at their word. That's a key part of the a trible c case, it says, and it needs to establish this that people were led to believe that Coals and Woolworths were looking after them by delivering lower prices. In other words, that people didn't think it was a trick.
It has a strong case to argue that it's misleading and deceptive.
As this court case is launched, how would you describe the way the public feels about the big two supermarket chains.
I think the public hates the big two supermarket chains, but it wasn't always like this. It's an appalling come down in terms of public image. During COVID, Coles and Woolworth's got together, they ensured we got toilet paper, all of the things we needed. Warlworths, they were a me year ago, in September, the most trusted brand in Australia according to Roy Morgan. Now that same company, Woolworths, is Australia's fifth least trusted brand. I think they probably always
behaved badly where they could. That's a guess. Don't hold me to that. We'll see what comes out in court. But when prices shot up in twenty twenty two, we saw, according to the ABS, in two and a half, here's a sixteen percent jump in prices. Previously that increased only slowly. You know, a lot of that was just passing on costs. But the a trip we'll see report says Woolworths widened its margins in that time of high inflation. We started
paying attention. We saw the pain every time we went shopping. We were horrified at what.
We saw robust competition.
I mean sums, the former head of the A Triple C says that we had one of the most concentrated supermarkets, lying it's not true.
And then we saw the walk out from a four Corners interview from the chief executive of Allworth's earlier this year.
His words are the wide by the way, I don't think you would impugne his integrity and his understanding of competition law. I'm just saying the world has got much more competitive. He retired eighteen months ago.
He's not okay, Well, can we teck that out?
Is that we saw the same chief executive, as a result of that, being threatened with imprisonment when he refused to give a clear answer to a Senate inquiry. I've answered the Questionna.
You have not answered the question, mister Vanderci. Honestly, I'm not interested in your spin or you bullshit. This is a Senate inquiry answer. The question was your return on equity twenty six percent in the last financial year, which is more than two and a half time.
It's been really one, I suppose image blunder after another, although none of them are as serious I think in the mind of the public as this.
Coming up after the break, Will Coles and Willworth's fight back. Peter Coles and Willworth's are being sued by the HBLEC over allegedly misleading customers with these illusory discounts on everyday items. Have the supermarket said about how they planned to respond.
Coles says it will respond and that's all. It issued a statement to the Stock Exchange almost immediately after the able C statement, which tends to indicate it thought it was coming, and Woolworth's merely said it would continue to engage with the Commission, which also indicates that it's been engaging about this reluctantly letting the Commission inside its computers for some time.
Do they have any chance of beating it?
It's an awful case to win. In fact, winning might be even worse. What do you mean You wouldn't need to let people inside your pricing practices. Everything would come
out in court. We saw this with Quantus. Quantus sold those ghost flights, flights that had already canceled, and when it made its submission to the Federal Court, using the same provision of the Australian Consumer Law, it said people did not buy tickets when they bought them for a flight, they bought quote, a bundle of rights that enabled them for various things. Now this made Quantus a laughing stock.
Does Coles want that? What Quantus did was to settle out of court for a total of one hundred and twenty million dollars And I think it regarded that as fairly good value for money. And it's interesting that Walworth's has not said it will fight it in court.
Okay, there's probably a lot of conversations happening behind the scenes then about how both companies should handle this. I would say, so, tell me about the possible penalties.
Labor increased the penalties shortly after it was elected. The penalty was ten million dollars for an instance of misleading and deceptive conduct. That's increased to fifty million. I don't think anyone thinks that they'll add five hundred cases together and multiply them by either ten or fifty million, that
that would be an extraordinary amount of money. There is a provision in the law actually which says if it's too complicated to calculate, there can be an award of thirty percent of a measure of turnover, which would be enormous. That's probably not going to happen. The Commissioners certainly said it wants those firms Coson Woorworths to donate money to charities that provide food to people in need. I think
what it wants is a big number. In interviews, Gina cass Gottlib, the chair of the arible C, has said she wants this to set an example, so they don't want nothing. In fact, there probably will not be satisfied with a genuine promise to fix the behavior. They want this to set an example in the same way as the Quantus case did.
So the ACHA will see they're seeking significant penalties. But Peter, what else is the government doing beyond that?
Well, just this week on Tuesday, the Treasurer ramped up the pressure on supermarkets. Further, he announced an extra thirty million dollars to the atriple C to investigate their pricing practices on an ongoing basis.
So what we're announcing today is all about more resources for more investigation and more enforcement and more sites for competition.
And he that's what talked about negotiating with state governments and through them local councils to sort of unpick planning logjams.
In addition to this crackdown, I'll also work closely with states and territories to progress a reform of planning and zoning regulations as fast as possible so that we can boost competition in the super market sector by opening up more sites for new stores.
The biggest thing, according to the draft report of the atrible C Inquiry, that stops people going to a competitive supermarket apart from inertia, is that there isn't one, and that's because regulations make it hard to start a new one and in some instances, and the Commission named two a suspicion of land banking. That is to say that Coles and Wolworth's buy a spot, they might say that one day they're going to have a supermarket on it, but The key effect in the meantime is that no
one else can. And there's even something bigger that certainly the Greens and the Coalition as it happens once, and that's that the a trible C applying to the Federal Court gets the right to force supermarkets to divest, maybe sell ten percent of their stores, maybe sell stores in some states, maybe find an entire arm of the business and hive it off. The Coalition supports that, labor does not. It happens in the US and it's happened in the UK.
What's so different about Australia. Why should Australia be less? I suppose free market in the sense of promoting competition by breaking companies up than the US or the UK.
And just finally, so we've heard Jim Thomas say that cracking down on zuper markets that's about relieving cost of living pressure. So do you think that what has been announced so this HC funding boost and more land potentially becoming available for new super markets, do you think these measures are going to do that to make the cost of living more affordable for people.
I do think they'll have an effect if they're surrounded by pressure from all sides. And you know, frankly, the government's announcing a new thing every few days and there'll be the major inquiry reporting in February. If they're surrounded by pressure on all sides, they have the ability to listen this bid. Like quantits. You Quantus charges high fares, but it can cut them when there's competition or when it's under scrutiny.
Peter, thank you so much for your time, A great pleasure.
I'm Daniel James seven am. Will be back tomorrow with an episode on Elon Musk's plan to launch a million satellites into orbit to power AI. What will that do to the night sky and what happens if the satellites collide.
Near where I live in Saskatchewan, Canada, a SpaceX Crew Dragon trunk, big pieces of it, landed on to farmland. Farmers found these giant pieces guide in contact with an astronomer and then had to figure out how do you deal with pieces of foreign countries spacecraft on your farm?
Right, Thanks for listening. We'll be back tomorrow