The ACCC’s has launched a case against Coles, credibly alleging that it made false claims about its “Down Down” discounts. The case shows how corporations exploit their monopoly power to extract wealth from everyday people and why we need to break them up.
The evidence from the ACCC shows that Coles abused (and continues to abuse) its dominant market position to extract excessive profit during a crisis of living standards.
This is the logical consequence of monopoly, rentier capitalism. As capital concentrates in fewer hands (Coles and Woolworths), these entities stop competing. Instead, they exercise their excessive market power to extract surplus value from everyday people, through higher prices and lower wages.
While the ACCC is seeking financial penalties, the reality is that no amount of financial penalty will prevent Coles from abusing its monopoly power or treating fines as anything but a cost of doing business.
Coles and Woolies control two thirds of Australia’s retail food supply market. What few people know is that both Coles and Woolworths are majority owned by foreign shareholders. The largest shareholders for Coles are Statestreet, Vanguard and Blackrock — massive US investment funds.
What is needed, at the very least, is the structural break-up of Coles (and Woolworths). This would remove the ability for the retail supermarket giants to price gouge, unilaterally set prices, and rip off consumers and their workers.
Manufacturing consent for higher prices
Central to the ACCC case is that the “Down Down” campaign was a calculated deception by Coles to steal money under the guise of discounts. It is a sinister form of economic unfreedom; economic coercion and expropriation hidden by slick marketing.
The ACCC alleges that Coles temporarily spiked the prices of 245 staple products, such as dog food, throat lozenges, and cereal, only to lower them slightly (or even increase them from their base price) and promote them as a discount.
Coles did this by temporarily increasing prices for a short “Price Spike Period”, to establish that the higher price to compare a subsequent false “discount”.
There are lots of examples from the ACCC, such as the “Strepsils” example. Coles sold throat Strepsils lozenges for $5.50 for over 600 days. They then increased the price to $7 for just 28 days, before dropping it to $6 (9 percent higher than the regular price for the previous two years) and slapping a “Down Down” sticker on it.
Anyone can see, and the ACCC alleges, that this is not just Coles responding to a supplier’s price change. It demonstrates that Coles planned these price changes to increase its profit margins while misleading consumers into believing they were receiving a discount.
If the ACCC wins the case, it will show that not only was Coles effectively stealing from consumers, but that it was creating an artificial inflationary spike across the entire Australian economy!
Abusing monopoly power
Coles and Woolworths control 67 percent of the Australian grocery market.
Under normal capitalist, market economic theory, a retailer like Coles attempting such cynical and illegal pricing strategies would face competition. The competitor would sell goods at a lower price than Coles, and stop the price gouging.
However, under the duopoly of Coles and Woolies, the two retailers have extreme market dominance to dictate terms to both suppliers and consumers. This means that Coles can demand low prices from the manufacturer of Strepsils, and increase the price of Strepsils on the shelf because there are very few other places for customers to buy them.
The ACCC evidence shows that price shifts were not merely reactions to external costs, but planned strategies to maintain profit margins.
The “Down Down” program, designed to build trust, was allegedly weaponized to exploit the very customers it claimed to help, diminishing their ability to make informed choices about essential goods.
It is impossible in a truly competitive market for such concentration — this level of market dominance can only be achieved through underhand tactics that are illegal in other countries. Coles and Woolworths over the decades used their power to buy up competitors or destroy competitors by undercutting them at a loss in order to buy market share.
Because historically the ACCC has been the handmaiden for capital concentration, Australia has the most concentrated grocery market in the world.
When a corporation becomes this large, it no longer serves the community. Instead, these corporations extract wealth and profits from consumers and producers it extracts rent from it.
“Greedflation”
This Coles case shows how “greedflation” pushes up the cost of living. Greedflation is where corporations use general inflation to increase their prices above the headline level of inflation to increase their profit margins.
By falsely and temporarily increasing “regular” prices, Coles has worsened inflation that is used by the Reserve Bank, the Australian Bureau of Statistics and Treasury to measure inflation and the cost of living. When a $4 item is briefly raised to $6 so it can be “discounted” to $4.50, the baseline cost of survival for the worker has risen by 12.5 percent, far in excess of the headline inflation.
This is sheer and immoral profiteering during an ongoing cost of living crisis and interest rates that are again rising. Meanwhile, Coles reported a net profit of over $1 billion. This is corporate accumulation by dispossession.
Profiteering at this national scale is only possible because of the pricing power that mega-corporations hold. It is not due to supply chain issues, wage breakouts or Gen Z profligacy as the mainstream neoliberal establishment continuously talk about.
We need to break up mega-corporations
Coles and Woolworths demonstrate why we need to structurally break up the monopolies that dominate Australia’s economy. These monopoly companies do not use their power and scale to lower prices, consumers do not benefit, and nor do workers or suppliers.
Their exorbitant power and dominance instead is used to price gouge and extract wealth for the benefit of mostly foreign shareholders.
We need the structural dissolution of foreign-owned mega-corporations like Coles.
Even if the ACCC wins, any penalties will just be absorbed as the cost of doing business. We can see exactly this corporate behaviour with the fines paid in other cases of corporate criminality and illegality. Volkswagen paid $125 million and Qantas paid $100 million for their deceptions. No business model changes, no contrition and no real consequences. They still remain powerful and dominant.
A fine, even in the “hundreds of millions” cannot dismantle the structural power that allows the illegal abuse to occur. ACCC fines against monopolists like Coles are just a license to bully — Coles uses its excessive profits to pay the fine then continues the price gouging.
Breaking up Coles and Woolworths into smaller, competing retailers — or replacing them with state-run or cooperative alternatives as is being piloted in New York and is common in many other countries — would remove their power to unilaterally set prices. It would force genuine competition, where in theory market manipulation, price fixing and excessive dominance would be harder.
Under mainstream neoliberal economic theory, a market where two players control two-thirds of the food supply is a market failure. It allows for implicit coordination where both giants have no real need to compete. Despite this, the ACCC, Treasury and successive governments have bent to the economic and political power of the two supermarket giants.
The ACCC allowed Coles and Woolworths to buy up or bully into bankruptcy local competitors like Bi-Lo, Foodland, or Franklins — the regulator is complicit. The fact that Coles and Woolworths have become so powerful shows that the regulatory system in Australia is designed expressly to allow corporations to become monopolies (read here for an incomplete list of all of Australia’s monopolies).
The ACCC calls this the “case of the century”. Even if they win, without breaking up the supermarkets, there will be no real change. Everyday people will continue to pay for the record profits of the duopoly and their foreign, US-based investment fund owners.