1 00:00:00,520 --> 00:00:03,640 Speaker 1: Already and this is this is the daily This is 2 00:00:03,680 --> 00:00:05,120 Speaker 1: the Daily OS. 3 00:00:05,120 --> 00:00:06,840 Speaker 2: Oh, now it makes sense. 4 00:00:14,600 --> 00:00:17,240 Speaker 1: Good morning, and welcome to the Daily OS. It's Tuesday, 5 00:00:17,280 --> 00:00:18,520 Speaker 1: the seventeenth of February. 6 00:00:18,640 --> 00:00:20,640 Speaker 2: I'm Emily Donahue, I'm Sam Kazlowski. 7 00:00:20,960 --> 00:00:23,800 Speaker 1: For two years, a pack of strepsels cost five dollars 8 00:00:23,840 --> 00:00:27,520 Speaker 1: fifty at Coal's. Then suddenly it was seven dollars. Then 9 00:00:27,720 --> 00:00:30,360 Speaker 1: just as suddenly, it was on sale for six dollars 10 00:00:30,520 --> 00:00:33,640 Speaker 1: with a big down down discount tag. The a Triple 11 00:00:33,680 --> 00:00:36,640 Speaker 1: C examined that sequence of events and is now alleging 12 00:00:36,680 --> 00:00:39,760 Speaker 1: that Coal's is not offering discounts, but rather engaging in 13 00:00:39,840 --> 00:00:42,920 Speaker 1: deceptive conduct in relation to a group of at least 14 00:00:43,120 --> 00:00:46,800 Speaker 1: two hundred and forty five items. Yesterday, the Consumer Watchdog 15 00:00:46,840 --> 00:00:49,680 Speaker 1: began its case against Coals in Australia's Federal Court, and 16 00:00:49,720 --> 00:00:51,920 Speaker 1: on today's pod, we're going to take a closer look 17 00:00:51,960 --> 00:00:55,160 Speaker 1: at the hearing that could reshape supermarket pricing in Australia. 18 00:00:59,000 --> 00:01:01,160 Speaker 2: M I always find these story is really interesting because 19 00:01:01,200 --> 00:01:03,120 Speaker 2: it kind of gets at the heart of something the 20 00:01:03,120 --> 00:01:05,280 Speaker 2: most of us do at least once a week, if 21 00:01:05,360 --> 00:01:08,600 Speaker 2: not a little bit more supermarket shopping. And there's not 22 00:01:08,720 --> 00:01:11,119 Speaker 2: a huge amount of choice in Australia, which is something 23 00:01:11,120 --> 00:01:13,720 Speaker 2: I want to ask you about a bit later. But 24 00:01:13,800 --> 00:01:16,640 Speaker 2: before we get into the specifics of what's being alleged 25 00:01:16,800 --> 00:01:20,720 Speaker 2: this week, give me some context about Coals and why 26 00:01:20,760 --> 00:01:22,760 Speaker 2: the A Triple C is going after them. 27 00:01:23,200 --> 00:01:26,959 Speaker 1: Sure so, Coals and Woolworths together control about two thirds 28 00:01:26,959 --> 00:01:29,720 Speaker 1: of Australia's supermarket sector, right, so quite a chunk, Yes, 29 00:01:29,760 --> 00:01:33,040 Speaker 1: a big chunk. We're talking about massive companies here too. 30 00:01:33,360 --> 00:01:36,000 Speaker 1: In the twenty twenty five to twenty twenty six financial year, 31 00:01:36,240 --> 00:01:40,200 Speaker 1: Coals reported profits of one point one billion dollars. 32 00:01:40,000 --> 00:01:42,000 Speaker 2: Right, So a good year to be a shareholder of 33 00:01:42,040 --> 00:01:43,040 Speaker 2: the supermari, Yes. 34 00:01:42,840 --> 00:01:44,880 Speaker 1: But I think that's almost every year for these companies. 35 00:01:45,240 --> 00:01:47,640 Speaker 1: Back in September twenty twenty four, the A Triple C 36 00:01:47,800 --> 00:01:51,360 Speaker 1: announced it was launching separate lawsuits against Coals and Woolworths. 37 00:01:51,760 --> 00:01:54,160 Speaker 1: The Coals trial started yesterday, which is why we're talking 38 00:01:54,160 --> 00:01:56,720 Speaker 1: about it today, and the Woolworths trial will happen later 39 00:01:56,760 --> 00:01:59,040 Speaker 1: this year in April and May. The A Triple C 40 00:01:59,160 --> 00:02:02,520 Speaker 1: analyzed the prime of hundreds of Coals grocery items over 41 00:02:02,560 --> 00:02:05,880 Speaker 1: about fifteen months from February twenty twenty two to May 42 00:02:05,920 --> 00:02:09,120 Speaker 1: twenty twenty three. They're now accusing Coals of using misleading 43 00:02:09,160 --> 00:02:12,040 Speaker 1: pricing across two hundred and forty five products. 44 00:02:12,280 --> 00:02:16,600 Speaker 2: So the HBLEC, Australia's competition and consumer watchdog, they're kind 45 00:02:16,600 --> 00:02:19,200 Speaker 2: of there to make sure that consumers like you and 46 00:02:19,240 --> 00:02:21,360 Speaker 2: I are getting a fair deal when it comes to 47 00:02:21,639 --> 00:02:24,720 Speaker 2: people or companies trying to sell us stuff. Yes, but 48 00:02:24,840 --> 00:02:29,200 Speaker 2: putting prices up itself might not necessarily be illegal. So 49 00:02:29,320 --> 00:02:33,760 Speaker 2: what exactly is the HBC claiming here that Coals did so. 50 00:02:33,840 --> 00:02:37,880 Speaker 1: The accusation centers on Coal's down Down promotion. If you've 51 00:02:37,919 --> 00:02:40,600 Speaker 1: shopped at Coal's, you've probably seen these tags. You've probably 52 00:02:40,639 --> 00:02:43,120 Speaker 1: heard the slogan down down prices are DWN yeah, a 53 00:02:43,120 --> 00:02:46,040 Speaker 1: big hand, yeah, the big red hand pointing down. They've 54 00:02:46,040 --> 00:02:49,280 Speaker 1: been running that campaign since twenty ten, and they're meant 55 00:02:49,360 --> 00:02:53,480 Speaker 1: to advertise sustained price reductions rather than just short term sales. 56 00:02:53,919 --> 00:02:56,000 Speaker 1: The tags show you the previous price and then they 57 00:02:56,040 --> 00:02:59,720 Speaker 1: show you the new, supposedly lower price. The HBC says 58 00:02:59,720 --> 00:03:02,480 Speaker 1: Coal use these tags to mislead customers. There were a 59 00:03:02,520 --> 00:03:04,040 Speaker 1: practice called price spiking. 60 00:03:04,160 --> 00:03:06,000 Speaker 2: Price spiking, yes, here's how that works. 61 00:03:06,080 --> 00:03:08,680 Speaker 1: So a product would be sold at one price for 62 00:03:08,720 --> 00:03:12,320 Speaker 1: a while, then Coals would briefly increase the price. Then 63 00:03:12,360 --> 00:03:15,440 Speaker 1: they'd slap a down down prices a down tag on it, 64 00:03:15,800 --> 00:03:19,560 Speaker 1: advertising it as discounted. But that discounted price is actually 65 00:03:19,680 --> 00:03:21,959 Speaker 1: higher than the same original price. 66 00:03:22,080 --> 00:03:24,560 Speaker 2: Okay, And at the top of the pod you spoke 67 00:03:24,560 --> 00:03:27,040 Speaker 2: about strepsils. You know you're the go to if you 68 00:03:27,120 --> 00:03:30,040 Speaker 2: got a sore throats. It turns out that that might 69 00:03:30,080 --> 00:03:32,160 Speaker 2: have led to a bit more pain in the hip pocket. 70 00:03:32,800 --> 00:03:35,160 Speaker 2: Talk me through that strepsels example, because I think it 71 00:03:35,240 --> 00:03:37,160 Speaker 2: captures what you're talking about here really. 72 00:03:36,920 --> 00:03:39,160 Speaker 1: Well, definitely. So that was one of the two hundred 73 00:03:39,200 --> 00:03:41,960 Speaker 1: and forty five items I mentioned earlier, and the Ahrible 74 00:03:42,040 --> 00:03:45,400 Speaker 1: c used strepsels honey and lemon lozenges as an example. 75 00:03:45,440 --> 00:03:48,800 Speaker 1: So Coal sold these for five dollars fifty for two years. 76 00:03:49,040 --> 00:03:52,000 Speaker 1: Then in October twenty twenty two they increased the price 77 00:03:52,080 --> 00:03:55,440 Speaker 1: to seven dollars. The next month, November, the strepsils were 78 00:03:55,440 --> 00:03:59,320 Speaker 1: advertised as down down to six dollars with a discount label. 79 00:03:59,600 --> 00:04:02,400 Speaker 1: So the customers are seeing this discount tag, they think 80 00:04:02,480 --> 00:04:04,680 Speaker 1: that they're getting a deal, but that six dollars price 81 00:04:04,880 --> 00:04:07,880 Speaker 1: is actually fifty cents more than what they had been 82 00:04:07,920 --> 00:04:10,920 Speaker 1: paying for the previous two years, and the A Triple 83 00:04:10,960 --> 00:04:13,680 Speaker 1: C says that this happened across a further two hundred 84 00:04:13,680 --> 00:04:15,840 Speaker 1: and forty four products at least, and that included things 85 00:04:15,880 --> 00:04:18,560 Speaker 1: like butter, deodorant, paper towels. The list goes on. 86 00:04:19,000 --> 00:04:22,719 Speaker 2: And in this scenario, has strep Cels done anything wrong? Like? 87 00:04:22,839 --> 00:04:25,119 Speaker 2: Is the ah trible c also saying that strep Cels 88 00:04:25,120 --> 00:04:27,480 Speaker 2: need to be accountable for this or the parent company 89 00:04:27,480 --> 00:04:28,119 Speaker 2: of strep Cels. 90 00:04:28,240 --> 00:04:31,800 Speaker 1: No, So the supplier provides an RRP, a recommended retail price, 91 00:04:32,120 --> 00:04:35,120 Speaker 1: and then the supermarkets can do theoretically what they want 92 00:04:35,160 --> 00:04:36,360 Speaker 1: with that price to make a profit. 93 00:04:36,520 --> 00:04:38,960 Speaker 2: I'm kind to hear a bit more about that, but first, 94 00:04:39,040 --> 00:04:44,640 Speaker 2: here's a quick message from our sponsor. Okay, so the 95 00:04:44,680 --> 00:04:48,000 Speaker 2: heart of this case is about really Coals and Coals 96 00:04:48,040 --> 00:04:53,440 Speaker 2: alone misled customers about what actually constitutes the discount right. 97 00:04:53,640 --> 00:04:57,160 Speaker 1: Yes, exactly, And the A Triple C defines a misleading 98 00:04:57,320 --> 00:05:01,039 Speaker 1: pricing practice as a situation where a sale price is 99 00:05:01,160 --> 00:05:04,360 Speaker 1: advertised as discounted when an item hasn't been sold at 100 00:05:04,360 --> 00:05:07,720 Speaker 1: the original price for a reasonable period before it goes 101 00:05:07,760 --> 00:05:10,640 Speaker 1: on sale. Interesting, So part of this trial will be 102 00:05:10,720 --> 00:05:14,479 Speaker 1: determining what is considered a reasonable period, right, yeah. 103 00:05:14,320 --> 00:05:16,760 Speaker 2: Yeah, whether that means kind of weeks or months. 104 00:05:16,560 --> 00:05:19,279 Speaker 1: Yes, exactly, And that's going to be a key question 105 00:05:19,520 --> 00:05:20,320 Speaker 1: in this trial. 106 00:05:20,680 --> 00:05:22,880 Speaker 2: So it's a trial where Coals can come and explain, 107 00:05:23,600 --> 00:05:25,840 Speaker 2: I assume that they haven't done the wrong thing and 108 00:05:25,880 --> 00:05:30,039 Speaker 2: instead give a justified explanation for their pricing practices. Give 109 00:05:30,040 --> 00:05:32,560 Speaker 2: me a sense of what Coals's defense is going to 110 00:05:32,560 --> 00:05:32,919 Speaker 2: look like. 111 00:05:33,240 --> 00:05:35,800 Speaker 1: Sure, So they are denying all of the allegations, as 112 00:05:35,839 --> 00:05:39,799 Speaker 1: you assumed, and their defense is centered around two main arguments. 113 00:05:39,960 --> 00:05:42,480 Speaker 1: So firstly, they're pointing to supply a cost, so the 114 00:05:42,520 --> 00:05:45,599 Speaker 1: cost of the product for them increasing. And secondly, they're 115 00:05:45,600 --> 00:05:48,200 Speaker 1: saying that those two hundred and forty five products were 116 00:05:48,200 --> 00:05:51,599 Speaker 1: temporarily removed from the down down promotion Okay. In a 117 00:05:51,640 --> 00:05:54,800 Speaker 1: November twenty twenty four response, Cole's lawyers said that the 118 00:05:54,839 --> 00:05:58,080 Speaker 1: affected products were sold at the non promotional price for 119 00:05:58,200 --> 00:06:01,159 Speaker 1: up to six weeks before they re entered that downdown 120 00:06:01,279 --> 00:06:04,279 Speaker 1: pricing program. So they're essentially arguing that there was a 121 00:06:04,400 --> 00:06:07,680 Speaker 1: gap between when the product went off sale and went 122 00:06:07,720 --> 00:06:10,159 Speaker 1: back on sale, therefore it was not misleading. 123 00:06:10,279 --> 00:06:11,880 Speaker 2: So I feel like a lot of this trial is 124 00:06:11,920 --> 00:06:14,919 Speaker 2: going to be about what that reasonable period actually looks like, 125 00:06:15,279 --> 00:06:19,200 Speaker 2: and probably you'd assume lead to some sort of position 126 00:06:19,360 --> 00:06:23,120 Speaker 2: that the judges will take as to what is reasonable 127 00:06:23,200 --> 00:06:25,880 Speaker 2: for consumers exactly. But we can't look at this in 128 00:06:25,920 --> 00:06:29,000 Speaker 2: a vacuum. This isn't the only scrutiny the supermarkets have 129 00:06:29,080 --> 00:06:30,599 Speaker 2: faced in the last couple of years. 130 00:06:30,720 --> 00:06:33,280 Speaker 1: Yeah, that's right. So there's been quite a lot going on. 131 00:06:33,320 --> 00:06:35,760 Speaker 1: And in twenty twenty five, in March, the a Triple 132 00:06:35,800 --> 00:06:39,640 Speaker 1: C released its findings from a separate year long inquiry 133 00:06:39,960 --> 00:06:42,919 Speaker 1: into the supermarket sector and this painted a pretty stark 134 00:06:43,080 --> 00:06:46,279 Speaker 1: image of what the Australian supermarket pricing scheme sort of 135 00:06:46,279 --> 00:06:49,000 Speaker 1: looks like. And this report found that Coles and Woolworths 136 00:06:49,040 --> 00:06:52,599 Speaker 1: was some of the world's most profitable grocery retailers. And 137 00:06:52,640 --> 00:06:55,200 Speaker 1: when you control two thirds of the market between you, 138 00:06:55,200 --> 00:06:56,960 Speaker 1: you can see that that's pretty significant. 139 00:06:57,040 --> 00:07:00,000 Speaker 2: I remember in that report the ah Trible c discribe 140 00:07:00,440 --> 00:07:04,400 Speaker 2: both Coals and Woolworths is operating in an oligopoly. Explain 141 00:07:04,440 --> 00:07:05,680 Speaker 2: what that structure looks like. 142 00:07:05,920 --> 00:07:09,120 Speaker 1: Sure, So, an oligopoly is basically when a market is 143 00:07:09,160 --> 00:07:12,280 Speaker 1: dominated by a small number of large players which mean 144 00:07:12,320 --> 00:07:13,920 Speaker 1: that there's very little competition. 145 00:07:14,160 --> 00:07:14,320 Speaker 2: Right. 146 00:07:14,360 --> 00:07:17,120 Speaker 1: Think about it this way, So when you go grocery shopping, 147 00:07:17,440 --> 00:07:19,880 Speaker 1: unless you live near an Aldi or an IgA of 148 00:07:19,920 --> 00:07:23,520 Speaker 1: food works an independent grocer, you're probably choosing between Coals 149 00:07:23,560 --> 00:07:26,480 Speaker 1: and Woolworths. And that's very different to say the US 150 00:07:26,560 --> 00:07:28,640 Speaker 1: or the UK, where they've got five or six major 151 00:07:28,680 --> 00:07:32,000 Speaker 1: players in the supermarket world and all of them are 152 00:07:32,000 --> 00:07:34,600 Speaker 1: competing for your business rather than just two. When there's 153 00:07:34,680 --> 00:07:38,040 Speaker 1: less competition, those dominant players have more power to set 154 00:07:38,080 --> 00:07:40,480 Speaker 1: the prices so they don't have to worry as much 155 00:07:40,520 --> 00:07:43,800 Speaker 1: about other companies undercutting them like they might in the 156 00:07:43,880 --> 00:07:44,880 Speaker 1: UK or the US. 157 00:07:45,200 --> 00:07:47,160 Speaker 2: And I know another part of what the AGEPC are 158 00:07:47,160 --> 00:07:49,200 Speaker 2: looking at over a number of years as whether in 159 00:07:49,240 --> 00:07:51,880 Speaker 2: fact that the two supermarket giants have worked together, and 160 00:07:51,960 --> 00:07:55,200 Speaker 2: those allegations are still out there, yet to be proven 161 00:07:55,320 --> 00:07:58,119 Speaker 2: in court. So we've got Coals on trial at the moment, 162 00:07:58,120 --> 00:08:00,240 Speaker 2: then we've got Wolworths. You said in a couple of months. 163 00:08:00,640 --> 00:08:02,400 Speaker 2: What happens now in this trial? 164 00:08:02,680 --> 00:08:04,760 Speaker 1: So this trial is expected to run for the next 165 00:08:04,880 --> 00:08:07,680 Speaker 1: ten days and Coals will have an opportunity to go 166 00:08:07,720 --> 00:08:09,960 Speaker 1: through what I assume will be a very extensive case 167 00:08:10,080 --> 00:08:13,400 Speaker 1: denying these allegations. And if this ruling falls in the 168 00:08:13,440 --> 00:08:16,160 Speaker 1: A Triple C's favor and they prove that Coals is 169 00:08:16,320 --> 00:08:21,520 Speaker 1: using these unethical illusory pricing strategies, then they will seek 170 00:08:21,600 --> 00:08:25,360 Speaker 1: significant cost penalties and mandatory community service from Coals. 171 00:08:25,560 --> 00:08:25,960 Speaker 2: Interesting. 172 00:08:26,040 --> 00:08:28,960 Speaker 1: Yes, specifically they want the supermarket to fund a registered 173 00:08:29,080 --> 00:08:32,920 Speaker 1: charity providing food and meals. This case will also then 174 00:08:32,960 --> 00:08:36,559 Speaker 1: set a precedent for the upcoming trial against woolworsh True. 175 00:08:36,760 --> 00:08:39,280 Speaker 2: I'm sure that Will Works are watching this very closely. 176 00:08:39,040 --> 00:08:41,760 Speaker 1: Exactly, and they're up in April and May, so both 177 00:08:41,800 --> 00:08:44,800 Speaker 1: supermarkets and shoppers will be watching this, as you said, 178 00:08:45,000 --> 00:08:45,600 Speaker 1: very closely. 179 00:08:45,760 --> 00:08:47,880 Speaker 2: Well, a ten day trial isn't that long, so I 180 00:08:47,960 --> 00:08:50,680 Speaker 2: expect that you'll probably be kind of watching that closely 181 00:08:50,720 --> 00:08:53,600 Speaker 2: and writing a piece telling us exactly what happens right 182 00:08:53,640 --> 00:08:55,280 Speaker 2: at the end of it. And thank you so much 183 00:08:55,280 --> 00:08:57,800 Speaker 2: for joining us, of course, thank you and thank you 184 00:08:57,800 --> 00:09:00,280 Speaker 2: for joining us on the Daily OS this morning. Really 185 00:09:00,320 --> 00:09:03,640 Speaker 2: great chat about the world of supermarket prices. This is 186 00:09:03,640 --> 00:09:06,559 Speaker 2: the type of story that we cover in TDA Finance actually, 187 00:09:06,720 --> 00:09:09,280 Speaker 2: and I'll throw a link to that newsletter in the 188 00:09:09,280 --> 00:09:12,320 Speaker 2: show notes for you that drops every Wednesday. Morning in 189 00:09:12,360 --> 00:09:14,839 Speaker 2: your inbox. I'm going to work on that today at work, 190 00:09:15,000 --> 00:09:17,040 Speaker 2: and I really hope you join us in the inbox 191 00:09:17,160 --> 00:09:19,760 Speaker 2: tomorrow morning. We'll be back in your ears for the 192 00:09:19,800 --> 00:09:22,280 Speaker 2: evening headlines in a couple of hours. Until then, have 193 00:09:22,400 --> 00:09:28,839 Speaker 2: a beautiful day. My name is Lily Maddon and I'm 194 00:09:28,840 --> 00:09:33,319 Speaker 2: a proud Arunda Bunjelung Calcuttin woman from Gadighl Country. The 195 00:09:33,400 --> 00:09:36,520 Speaker 2: Daily oz acknowledges that this podcast is recorded on the 196 00:09:36,559 --> 00:09:39,240 Speaker 2: lands of the Gadighl people and pays respect to all 197 00:09:39,400 --> 00:09:42,480 Speaker 2: Aboriginal and Torres Strait Island and nations. We pay our 198 00:09:42,480 --> 00:09:45,640 Speaker 2: respects to the first peoples of these countries, both past 199 00:09:45,720 --> 00:09:46,240 Speaker 2: and present.