A leading class action lawyer says the mis-selling allegations leveled against Woolworths and Coles “support a very good class action”.
The consumer watchdog announced this week it would separately sue Coles and Woolworths for allegedly misleading customers with hundreds of “sale” prices for more than a year until May 2023.
Coles says it will defend the case, Woolworths says it will “carefully review the claims”.
Changes to Australian Consumer Law now legislate maximum penalties of $50 million, or three times the value of the “reasonably attributable” profit made, for each time a customer was deceived.
A government source has warned against even multiplying the 266 Woolworths products in question – or the 245 Coles products – by $50 million to speculate on what figure in damages the Australian Competition and Consumer Commission might pursue if the Federal Court rules in its favor.
On Monday, ACCC chair Gina Cass-Gottlieb said the sanctions her commission would apply had to be sufficient to deter other corporations and “not a cost of doing business for such major companies.”
Ms. Cass-Gottlieb was blunt when asked about the possibility of clients filing a class-action civil suit, saying that was not the commission’s role.
“We are seeking redress in the case through a community service order (for Woolworths and Coles) to donate to the most needy members of our community,” he said.
Leading class action lawyer says mis-selling allegations against Woolworths and Coles “support a very good class action” (file image)
“There is always the possibility of class action lawsuits being filed regarding consumers who have been harmed.”
Carter Capner Law Director Peter Carter believes clients should file a class action lawsuit.
“The facts alleged support a very good class action on behalf of consumers across Australia who regularly shopped in those markets during the relevant period,” he told NewsWire.
Running some quick numbers, Carter said that if he were leading a class-action lawsuit based on these allegations, compensation for plaintiffs would vary depending on household size.
A household spending $500 a week on food, given that supermarkets reportedly charged about 10 percent more than the original price when various items went on sale, could ask for compensation of $4,000 to $5,000.
“On a uniform loss per household or individual consumer, a claim of more than $2,000 each could be reasonable,” Mr. Carter said.
These are the figures that appear on the back of the envelope. The data scientists we work with have to crunch the numbers to formulate the right approach.’
A potential class action would not depend on the ACCC’s case in the Federal Court.
‘But the evidence the ACCC has gathered would be useful. That said, gathering evidence is something that a class action lawyer is very capable of doing on his or her own,” Mr. Carter said.
The Brisbane-based lawyer has a penchant for airline passenger class actions. One of his cases represents clients on board a flight from London to Sydney that suffered turbulence causing injuries in May.
It is still early days in the ACCC Federal Court case; Coles and Woolworths received documents on Monday (file image)
It is still early days in the ACCC Federal Court case; Coles and Woolworths received documents on Monday. But the prices of both stocks fell in the following days.
The reputational damage from being sued would add to the negative sentiment against supermarkets, Carter said.
‘Consumers should express their outrage. They should be aware that this is (supposedly) extremely offensive behavior designed to mislead them.
“Supermarket conduct should not be allowed to be swept under the carpet.”
Following news that the case was heard in the Federal Court on Monday, Coles’ share price fell 4.8 per cent on Wednesday and Woolworths lost 3 per cent.
Late on Thursday, the ACCC attacked the supermarket giants from a different front, publishing an interim report of a separate general investigation it is carrying out into the supermarkets.
The ACCC says that “oligopolistic market structures may limit incentives to compete vigorously on price.”
“We see Woolworths and Coles offering a very similar experience to customers through largely undifferentiated product ranges, pricing at similar levels and similar unpriced offers, including loyalty programmes,” the ACCC report reads.
After that interim report came out, the Coles share price lost another 1.2 per cent in early Friday afternoon. Woolworths price also fell 0.7 per cent.
“Throughout the year, Woolworths Group has engaged in a number of good faith consultations and reviews and will continue this approach, including appearing at public hearings and providing any additional information required by the ACCC.” Woolworths told the ASX on Friday.
Both supermarkets cited the pending Federal Court matter as a reason for not commenting to NewsWire on this story. Both were asked what they were doing to prepare for the Federal Court case, whether their supermarket had increased charitable donations since the case was filed, whether they were concerned about a possible class action lawsuit and the implications of large penalties if lose in court.
