The Australian Competition and Consumer Commission (ACCC) has launched legal action against Woolworths and Coles for allegedly misleading customers with inflated discounts.

The ACCC claims that both supermarket chains raised prices on various products, including dairy and personal care items, before advertising discounts that did not represent genuine savings.

Specifically, the ACCC alleges that the supermarkets violated consumer law through deceptive pricing strategies in their promotional campaigns, such as 'Down Down' and 'Prices Dropped'.

The case involves 276 promotional items from Woolworths and 255 from Coles, with the ACCC asserting that both chains profited significantly from these misleading practices.

According to the ACCC, the supermarkets increased prices by at least 15% before applying discounts, resulting in customers ultimately paying more than they did prior to the price hikes.

An example highlighted by the ACCC includes Woolworths selling Arnott's Tim Tams at a regular price of $4.50, raising it to $6, and then promoting it at $5.50, representing a 22% increase.

Similarly, Coles allegedly sold L'Oréal moisturisers at $15, increased the price to $24, and then offered them at $18, which was still 20% above the regular price.

Both supermarkets intend to defend against the allegations, with Woolworths claiming its pricing program aims to provide 'great everyday value' to consumers.

Coles and Woolworths are required to respond to the ACCC's allegations by late November, with further court hearings scheduled for December.

If the ACCC prevails in its case, it plans to impose significant penalties on the supermarkets for these alleged breaches of consumer law.

This case is significant as it could have wide-ranging implications for the retail industry, impacting suppliers, retailers, and consumers alike.

The ACCC initiated separate legal proceedings against both supermarket chains in September, marking a critical step in addressing misleading pricing practices in Australia.