Misleading and Deceptive Conduct and Sales Promotions

Section 18 of the Australian Consumer Law (ACL), as set out in the Competition and Consumer Act 2010 (Cth) (the Act), provides that it is prohibited for a person to engage in conduct that is, or is likely to be, misleading and deceptive, in trade or commerce.

This applies even where there is no intention to mislead or deceive, meaning there is no honest mistake defence to misleading and deceptive conduct.

In practice, if apparent, contravention of Section 18 of the ACL may look like:

· the provision of information causing the wrong conclusion;

· lying to the consumer by omitting or altering important information; or

· making false/inaccurate claims.

In sales promotions, this may be in reference to pricing or qualifying terms and conditions, to induce the purchase of a goods or services by a consumer.

Coles and Woolworths have both been in recent headlining proceedings regarding their promotional pricing and material increases in price on hundreds of common products. These increases for Coles have been found by the ACCC to have created illusory discounts on 245 products. For Woolworths, the ACCC is alleging that 266 illusory discounts have been created.

The ACCC alleges both supermarkets had individually planned to later place the products in question on promotion after a temporary price spike to establish a higher base price, or what was displayed on tickets as the ‘was’ price.

On 14 May 2026, Coles was found by the ACCC to have conducted their pricing in a misleading and deceptive way in contravention with the Act. The ACCC investigated the pricing of 245 products on popular common household purchases and brands between February 2022 and May 2023.

Coles’ strategy included placing products on a ‘Down Down’ promotion where prices were discounted for long periods of time. Many of the 245 products investigated by ACCC were included in this promotion and were found to be the same price for six or more months. The ‘Down Down’ promotion was described by ASIC as being distinguishable both in store and online, by red and white tickets where the previous higher product price is displayed on the ticket as ‘price was’.

ACCC ascertained that in response to supplier demands, Coles spiked the price of the 245 products for 45 days or less and then placed these products back on the ‘Down Down’ promotion.

As a result, the final price of these products was at least 15% higher than the previous regular price before the spike. This resulted in Coles being able to display the ‘price was’ price to consumers at the price spike level, despite it being higher than the original long-standing price.

A previous Coles internal policy prevented products from being discounted as part of the ‘Down Down’ promotion unless the product had been offered at the previous price for a minimum of 12 weeks. In March 2022, this policy changed. Although the ACCC did not take issue with the increase in prices or the reasons for, the number of days between the increases and decreases was problematic.

It was indicated by the ACCC decision that if Coles had sold all 245 of the products at the spiked price for 12 weeks before implementing their ‘Down Down’ promotion, it would not have been deemed misleading and deceptive conduct.

Woolworths are facing similar allegations surrounding promotional pricing behaviour between September 2021 and May 2023. The ACCC alleges 266 instances where products were similarly spiked and then dropped to a price higher than or the same as the original price before the spike and placed on their ‘Prices Dropped’ promotion.

The proceedings against Woolworths remain before the Court.

The Chair of the ACCC, Gina Cass-Gottlieb, has stated that “by altering prices in this way, it diminished the ability of consumers to make informed choices about what a good price/discount was.” She also highlighted how this pricing “allowed Coles and allegedly Woolworths to derive significant value from consumers being misled and deceived through their promotional pricing, of which each business derived the ultimate benefit.”

More recently, the ACCC has similarly commenced proceedings in the Federal Court against Grill’d for making false and misleading representations to their customers about environmental donations. Between January 2021 and April 2024, Grill’d ran a promotional campaign, making various representations that they would make a $1 donation towards planting a tree for every burger purchased on a Tuesday.

Upon the ACCC’s investigation of their terms and conditions, there were a series of further qualifying conditions found, which the ACCC alleges resulted in only 4% of 5 million burgers purchased on a Tuesday in this period, qualifying for the $1 donation.

This decision also remains before the Court.

These proceedings highlight the importance of conducting accurate advertising and sales promotions, so that your business avoids making representations that could be considered misleading and deceptive conduct.

To avoid potential breaches of the ACL, it is recommended that businesses consider their policies and procedures with respect to:

· the commercial basis for promotions and pricing;

· reasonable pricing period lengths;

· promotional guardrails about when to place products onto promotional programs; and

· the obviousness of all qualifying terms and conditions in a promotional strategy.

At Sanicki Lawyers, we pride ourselves in assisting our clients with navigating complex legal frameworks such as the ACL, to provide advice specific to your business’ circumstances.

Our Commercial Team can provide you with practical and compliant advice on current or future advertising and sales promotions, to ensure compliance with the Australian Consumer Law.

Get in touch with our Commercial Team today.

hello@sanickilawyers.com.au or on (03) 9510 9888