Australia's Woolworths, Coles to defend lawsuit over discounts
Coles & Woolworths shares jump most in one week
Lawsuit follows similar consumer watchdog proceedings
Consumer protection law firm seeks refunds for customers
Pricing practice was strategy to navigate inflation, says analyst
Adds share moves in paragraph 2, analyst comments in paragraph 10
By Rajasik Mukherjee
Nov 15 (Reuters) -Australian grocers Woolworths WOW.AX and Coles COL.AX said on Friday they would defend class action proceedings commenced by a law firm in federal court over alleged misleading discount claims.
The comments sent shares of Woolworths up as much as 1.1%, logging their best intraday percentage gain since Nov. 8, while Coles rose 1.2%, on track for its best day since Nov. 8.
On Thursday, Gerard Malouf & Partners launched a lawsuit against the country's two biggest supermarkets, accusing the duo of promoting misleading discount claims on daily-use products.
The lawsuit brings to the forefront the difficulty of regulating a supermarket industry where Coles and Woolworths enjoy a clear duopoly.
In September, Australia's consumer watchdog took the supermarket chains to court over their advertising of discounts, claiming that the firms had benefited from revenue derived from millions of units of products involved. The supermarkets could face fines if they lose.
Prime minister Anthony Albanese, who has faced pressure to do more to combat rising grocery prices and who faces an election within a year, said in September the actions alleged by the regulator would be unacceptable if true.
Gerard Malouf & Partners said its lawsuit was different from that of the Australian Competition and Consumer Commission, as it seeks refunds of up to A$1,300 each for affected customers.
The consumer protection law firm said it had launched the suit to retrieve the price difference consumers had to fork out between the advertised "discounted" prices and the real prices.
The law firm alleged that everyday items at both the companies had been subject to price hikes and the discounted prices were either higher or same as the price before the increase.
"Misleading is a very direct term to describe the pricing strategies of the companies," said market analyst Grady Wulff at Bell Direct. "It would be better to describe the price movements as strategic attempts by Coles and Woolworths to navigate the inflationary environment at the same time as trying to offer consumers the lowest cost of goods plausible to remain financially resilient."
Reporting by Rajasik Mukherjee; Editing by Maju Samuel and Christopher Cushing
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