In 2015, the Australian Competition and Consumer Commission (ACCC) took Coles Supermarkets Australia Pty Ltd (Coles) to the court about their guilty misleading customers with their promotion claims that could be deceptive. Coles promoted its bread with the phrase “Baked Today, Sold Today” and in some cases “Freshly Baked in-store”. The Federal Court judged that this claimed promotion phrases were false and mislead consumers because the way to sell the bread was different with promoted way. Coles has been ordered to pay the penalty $2.5 million for the misleading promotion of its bread after breaking Australian Consumer Law.
Who is Coles?
Coles is an Australian giant supermarket and it is defined as ” Coles is a leading Australian retailer, with over 2,500 retail outlets nationally. Coles makes life easier for Australians by delivering quality, value and service to the 21 million customers who shop with us each week.” on their website.
What Coles has done
Coles ran the “Baked Today, Sold Today” over three years and the campaign was a part of nationwide promotions in 637 Coles supermarkets. Their consumer thought Coles bread were baked the day and sold on the same day due to the promotion, in fact, Coles partially baked and frozen off site by a supplier, transported and ‘finished’ at in-store bakeries within Coles supermarkets. For this affair, the Court found that the promotion phrases “Baked Today, Sold Today”, “Freshly Baked” and “Baked Fresh” mislead numerous customers that the bread products had been backed and sold on the same day in a fresh process using fresh, not frozen product.
The Judgement from The Federal Court
As the Judgement for this issue, The Federal Court ended up and announced on the website as “The Federal Court has ordered Coles Supermarkets Australia Pty Ltd (Coles) to pay penalties of $2.5 million for making false or misleading representations and engaging in misleading conduct in relation to the promotion of its par baked bread products, in proceedings brought by the Australian Competition and Consumer Commission.” For this judicial decision, Chief Justice Allsop mentioned the reason as
“The evidence before the Court showed that Coles had engaged in the campaign with the clear purpose of improving its market share vis-à-vis its competitors, being bakeries such as Bakers Delight… It set out to do so by engaging in the conduct that, in fact, breached the Australian Consumer Law”
Chief Justice Allsop
In addition to the penalty fine, Australian Competition and Consumer Commission required two points to Coles which was to stopped to use the package, signage, website, and other promotional tools to promote the bread product was backed from fresh dough and sold on the same day. Another requirement was to inform correct information on the Coles website and its bakery.
What others comment for this issue
For this Coles deception promotion, Jos de Bruin who is a chief executive of Master Grocers Australia, which represents operators such as IGA and Supabarn commented that “We feel the penalty should be great for conducts such as telling a lie”. Also, the “Baked Today” promotion had got a reputation that it is substantial and serious.
The comment of Coles for the judgement
“In talking to customers about our bread range we did not deliberately set out to mislead anybody, but we accept that we could have done a better job in explaining how these products are made”
Coles spokesman
In addition, Coles spokesman said that Coles is proud of their bread products whether the baked from in-store or by other Australian suppliers.
What has Coles changed after this case?
As Coles has required to stop using the promotion claim, they have changed the way to promote their bread products. They partnered with a professional French baker Laurent Boillon and they provide some recipes with their bread products.
“Since I was a sixteen year old apprentice in France, my life has been dedicated to bread”
Laurent Boillon
Now they have found NEW strategies to promote effectively without misleading their consumers.
About the ethic issue in this time
The basic of an ethical issue for this problem is Deception, which breached The Australian Consumer Law. The law is described as “The Australian Consumer Law (ACL) is a national law that aims to protect consumers and ensure fair trading in Australia. The ACL is part of the Competition and Consumer Act 2010 (the Act)” . Cornell Law Library Scholarship@Cornell Law has a report about the meaning of Deception and it says that Deception means “words or conduct intended to induce false beliefs in others, plays a complex role in human life”. So in this case, the claim “Baked Today, Sold Today” which lead the majority of customers misled applied to the matter even if Coles insisted that they did not intend to deceive everyone. Australian Competition and Consumer Commission mentions misleading or deceptive conduct is illegal for any business area whether the concerned person or company intended to deceive anyone or there is no damages or loss for other businesses as a result. Although the penalties and fines will be different depends on each case and company, Australian Competition and Consumer Commision shows the standards of penalties and fines for Australian Consumer Law and it says that the cost is up to $10,000,000, three times the value of the benefit received, or 10% of annual turnover in preceding 12 months, if court cannot determine benefit obtained from the offense.
What it should be concerned
This Coles Fresh bakery deception advertising case has occurred in Australia but this type of ethics issue can be possible whenever businesses run promotions. All promoters and advertisers need to concern if the promotion has no risk of deception or misleading to its customers. While there is described the Consumer Law and deception, it is unclear for companies to judge if the promotion breaches the law. As Coles insisted, the claim that no intended to mislead to wrong information does not make sense, and once it has picked up as an ethical issue by Court, the company or person will be punished and required to penalty fines. In addition, the consumer will reckon that the company is used to conduct deception promotion and it is difficult to build trust for the company by them.
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