A prominent class action lawyer says allegations of mis-selling against Woolworths and Coles ‘support a very good class action claim’.
The consumer watchdog this week announced it is charging Coles and Woolworths separately 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 the Australian Consumer Law now provide for maximum fines of $50 million, or three times the value of the ‘reasonably attributable’ benefit, for each instance a customer was misled.
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 the damages the Australian Competition and Consumer Commission could seek if the Federal Court in its advantage would decide.
On Monday, ACCC chair Gina Cass-Gottlieb said the penalties her committee would impose should be enough to deter other companies and “not represent the cost of doing business for such large companies”.
Ms Cass-Gottlieb took a very direct role when asked about the potential for a civil class action to be launched by customers, saying this was not the committee’s role.
“We are seeking redress in the case through community service (for Woolworths and Coles) that we can provide to the neediest members of our community,” she said.
A prominent class action lawyer says allegations of misselling against Woolworths and Coles ‘support a very good class action claim’ (stock image)
‘There is always a chance of collective action against consumers who have suffered damage.’
Peter Carter, director of Carter Capner Law, believes clients should take a class action.
“The alleged facts support a very good class action claim on behalf of consumers across Australia who regularly shopped in those markets during the relevant period,” he told NewsWire.
Mr. Carter did some quick numbers and said that if he were to lead a class action based on these allegations, compensation for plaintiffs would vary depending on the size of the household.
A home that spent $500 a week on food could seek compensation of $4,000 to $5,000, as supermarkets reportedly charged about 10 percent more than the original price when several items went on sale.
“For a uniform loss per household or individual consumer, a claim of more than $2,000 could be reasonable,” Mr Carter said.
“These are back-of-the-envelope figures. The data scientists we work with must understand the figures to formulate the right approach.’
A potential class action would not hinge 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 a class action attorney can do very well on their own,” Carter said.
The Brisbane-based lawyer has a penchant for airline passenger class actions. One of his cases involves representing clients on board a flight from London to Sydney that encountered turbulence that caused injuries in May.
It is still early in the ACCC Federal Court case; Coles and Woolworths received their papers on Monday (stock image)
It is still early in the ACCC Federal Court case; Coles and Woolworths received papers on Monday. But both stock prices fell in the following days.
The reputational damage from a lawsuit would increase negative sentiment toward the supermarkets, Carter said.
‘Consumers must express their outrage. They should keep in mind that this was (allegedly) highly offensive behavior designed to deceive them.
‘The behavior of the supermarkets should not be swept under the carpet.’
Following news that the case was filed 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 came to the supermarket giants on another front, releasing an interim report from a separate general investigation it is conducting into the supermarkets.
The ACCC says that ‘oligopolistic market structures can limit incentives to compete vigorously on price’.
“We see Woolworths and Coles offering customers a broadly similar experience through largely undifferentiated product ranges, pricing at similar levels and similar off-price offers, including loyalty programs,” the ACCC report said.
After that interim report came out, Coles’ share price lost a further 1.2 per cent on Friday afternoon. Woolworths’ price also fell 0.7 percent.
“Throughout the year, Woolworths Group has conducted a number of investigations and assessments in good faith and will continue this approach, including appearing at public hearings and providing further information as required by the ACCC.” Woolworths told the ASX on Friday.
Both supermarkets cited the pending Federal Court case as a reason for not commenting to NewsWire on this story. Both were asked what they did to prepare for the case in Federal Court, whether their supermarket had increased charity donations since the case was filed, whether they were concerned about a possible class action and the consequences of high punish them if they lost in court.