Coles disguised price increases on at least 245 products by offering discounts that were “literally true” but also “utterly misleading”, the competition regulator has argued at the beginning of a high-profile court case.

A federal court battle between the Australian Competition and Consumer Commission (ACCC) and Coles began on Monday, testing allegations the supermarket breached the law by offering “illusory” discounts on many everyday products.

The ACCC alleges Coles misled shoppers because the products were sold at one regular price for at least six months before being temporarily inflated and then dropped slightly as part of a “Down Down” promotion.

The strategy is known as “was/is” comparative pricing.

The consumer watchdog will argue the promoted prices were actually higher, or the same as, the previous regular price. In many cases, Coles effected the temporary price spike to establish a higher “was” price, according to the legal claim.

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On Monday, Justice Michael O’Bryan heard the ACCC’s opening submissions on the first day of the 10-day hearing in Melbourne, which will scrutinise Coles pricing practices between February 2022 and May 2023.

Barrister Garry Rich SC, acting for the ACCC, gave the court the example of Coles’ pricing of 1.2kg cans of Nature’s Gift wet dog food.

Coles had sold the dog food for $4 for 296 days between April 2022 and February 2023, Rich told the court.

The supermarket then increased the price of that product by a “whopping 50%” to $6 and sold it at the higher retail price for just 7 days.

After a week, Coles changed the price of the dog food to $4.50 and told customers it was on sale as part of the “Down Down” promotion, claiming that price “was” $6.

Rich said while Coles’ claim $4.50 was a discounted price for the dog food was “literally true”, it was also “utterly misleading”.

“A consumer who knew the real facts would not think the price of the dog food had gone down,” he told the court.

“Nor would they think the price of $4.50 was a genuine reduction or discount.”

The case will put pricing practices across the supermarket industry under a microscope and have ramifications for a very similar case the ACCC is running against Woolworths, which is expected to be heard at a later date.

The ACCC is seeking large penalties and community service orders against Coles, which, along with Woolworths, controls two-thirds of the Australian grocery market.

Coles will defend the ACCC’s allegations by arguing the changes in pricing was a response to increased costs from suppliers.

Rich told the court on Monday that Coles disguised wholesale price increases as discounts by temporarily spiking the retail price much higher than it needed to, then reducing the price to the “new regular price”.

“In our submission Coles misled its customers into thinking it had reduced its regular prices when in the space of about a month Coles had implemented a price increase for those products,” he said.

The case has started during a period of reigniting inflation, with groceries and other household costs rising strongly again.

The Consumer Price Index, the government’s official inflation metric, rose 3.8% in the 12 months to December 2025, up from a 3.4% increase in the 12 months to November 2025. Spending on food and non-alcoholic beverages contributed 3.4% to annual inflation in the 12 months to December, according to the Australian Bureau of Statistics, second only to housing.

More details soon …