ACCC supermarket investigation: what happened

Timeline: how the investigation unfolded

The ACCC's scrutiny of supermarket pricing intensified throughout 2024 and 2025. The regulator began reviewing pricing practices at Coles, Woolworths, ALDI, and Harris Farm. The scope was broad: whether advertised discounts were genuine or illusory.

December 2024: Coles settles

Coles reached a settlement with the ACCC in the Federal Court. The company agreed to pay AUD 10 million and implement corrective measures in how it advertises and labels discounted prices. The settlement acknowledged that certain pricing practices may have breached the Australian Consumer Law. No admission of wrongdoing was made, but the legal resolution signalled that the regulator's concerns had substance.

February 2025: ACCC releases final report

The ACCC Supermarkets Inquiry Final Report documented the findings. The report examined pricing practices across the four major retailers and found evidence of systematic illusory discounting. According to the ACCC, prices on hundreds of products had been raised before being advertised as being "on sale," making the discount appear larger than it was. The report stated that the ACCC's investigation revealed pricing practices that "may have resulted in higher prices for consumers."

April 2026: Woolworths proceedings commence

Woolworths faced court action initiated by the ACCC. The proceedings, which commenced in April 2026, examined whether the retailer engaged in misleading or deceptive pricing conduct under the Australian Consumer Law. Unlike the Coles settlement, this matter proceeded to a contested hearing.

What the ACCC actually found

The Final Report identified 266 Woolworths products and 245 Coles products where pricing practices raised concerns. The ACCC analysed weekly price movements and found evidence that regular prices were inflated specifically so that advertised discounts would appear attractive.

According to the ACCC, the pattern works like this: a product sits at a regular price, then that price is marked up. After the markup, the product goes on sale at a price that looks like a discount but is actually higher than the regular price was weeks or months earlier. The shopper sees the discount. The ACCC saw the inflation that made the discount possible.

The report used the term "illusory discount" to describe this practice. The word "illusory" means deceptive or not real. An illusory discount is marketing noise around a price that isn't actually advantageous compared to what the product cost in the past.

The scale of the problem

The ACCC's investigation wasn't confined to two retailers. ALDI and Harris Farm were also reviewed, though enforcement actions focused on Coles and Woolworths. Pinch's own 52-week tracking database (May 2026) corroborates the ACCC's findings. At Coles, 42.3% of products swing 15% or more on a repeating cycle. At Woolworths, it's 35.3%. These cycles create the conditions for illusory discounts to flourish.

What does the settlement mean?

The Coles settlement imposes obligations on the retailer going forward. The company must review how it advertises discounts and ensure that claims about price reductions aren't misleading. It must implement compliance programs and reporting. It paid the ACCC 10 million dollars.

But does this mean Coles prices will drop? Not directly. The settlement doesn't cap prices or mandate specific price points. It requires compliance with existing consumer law. What it does is create a legal record that the regulator is watching and willing to enforce. That matters to some extent, but the structure of hi-lo pricing remains legal.

The Woolworths proceedings are ongoing as of May 2026. The outcome will depend on the court's interpretation of Australian Consumer Law and what evidence the ACCC presents. If the court finds against Woolworths, a similar settlement or penalty may follow.

Illusory discounts: how to spot them

The ACCC's term "illusory discount" is worth understanding because you'll see it in media coverage. An illusory discount is a price reduction that looks good in isolation but isn't actually cheaper than it was in the past.

Example from a checkout visit: you see "Chicken Breast now 12.99, was 19.99." Sounds like a bargain. But if you tracked the price history, you'd see that chicken breast was 12.50 six weeks ago and 13.20 eight weeks before that. The "regular" price of 19.99 was inflated specifically to make 12.99 look impressive.

This is what the ACCC investigated and what Pinch helps you spot. With price history, an illusory discount loses its power.

The price gouging ban: July 1, 2026

Separate from the ACCC's investigation into historical pricing practices, Australian law is changing. On July 1, 2026, a new price gouging ban takes effect. This law restricts retailers' ability to increase prices excessively during declared emergencies (floods, natural disasters, supply chain disruptions).

The price gouging ban doesn't directly address illusory discounting under normal conditions. But it signals political pressure on supermarket pricing. The investigations and the ban combined suggest that Australian regulators and lawmakers are paying closer attention to how supermarkets use pricing as a tool.

What it means for your grocery bill

Legally, the ACCC's action constrains how retailers can advertise discounts but doesn't eliminate hi-lo pricing itself. The cycles will continue. Prices will rise and fall on the repeating pattern. Specials will still be marketed aggressively.

What changes is transparency. When the ACCC publishes that 511 products across two major retailers were subject to illusory discounting, you now know to be sceptical of advertised deals. When Coles settles with the regulator, you can infer that pricing practices were questionable enough to warrant legal action. When Woolworths faces court, the scrutiny continues.

For a low-income household buying groceries on a tight budget, this matters. A 10% overpayment on a trolley that should cost AUD 80 is AUD 8 lost. Across a year, that's AUD 400. For many Australians, that's meaningful money. The ACCC's investigation makes it harder for supermarkets to obscure that loss with misleading marketing.

But there's still a gap. Knowing that illusory discounting exists doesn't protect you unless you have price history to identify it. That's where tools that track real prices become important. That's why Pinch exists.

The duopoly question

Australia's supermarket landscape is dominated by two companies: Coles and Woolworths control roughly 60-65% of the market. ALDI and Harris Farm are smaller. The dominance of two players creates less price competition than a more fragmented market would. The ACCC has investigated supermarket competition and duopoly concerns multiple times. This pricing investigation sits within a larger context of market concentration.

The settlement with Coles and the proceedings against Woolworths don't address market structure. They address specific pricing practices. But they highlight an underlying problem: when two retailers control most of the market and use similar pricing tactics (hi-lo cycles, illusory discounts), shoppers have limited options. That's a structural issue that regulation can constrain but not solve.