Australia’s two biggest supermarket chains will face court after allegedly “making misleading claims” to consumers regarding discounts on their products.

The Australian Competition & Consumer Commission (ACCC) launched legal action in the Federal Court against Woolworths Group Limited and Coles Supermarkets Australia Pty Ltd on Monday, September 23.

The ACCC alleges that both retailers increased prices of products by 15 per cent for brief periods before placing them in Woolworths’ Prices Dropped promotion and Coles’ Down Down promotion at prices lower than during the price spike but higher than, or the same as, the regular price.

ACCC Chair Gina Cass-Gottlieb said the two major supermarkets allegedly “breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory”.

“Following many years of marketing campaigns by Woolworths and Coles, Australian consumers have come to understand that the ‘Prices Dropped’ and ‘Down Down’ promotions relate to a sustained reduction in the regular prices of supermarket products. However, in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price,” Cass-Gottlieb said.

“We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory.

“We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price.”

The allegations involve 266 products from Woolworths sold at various times over a span of 20 months, and 245 products from Coles sold at different intervals across 15 months. The ACCC alleges that both supermarkets sold tens of millions of these affected products, generating substantial revenue.

The watchdog is pursuing penalties, costs, and community service orders that would require the supermarkets to fund registered charities providing meals to vulnerable Australians.

-with AAP.