Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited (2014) 317 ALR 73
Undesirable business practices; misleading conduct; implied representations
Facts: The supermarkets operated by Coles Supermarkets Australia Pty Ltd (Coles) had in-store bakeries where bread was sold. Signs were displayed on the counter of these bakeries, with phrases such as "Baked Today, Sold Today", "Freshly Baked", "Baked Fresh", "Freshly Baked In-Store" and "Coles Bakery". All in-store bread was also labelled with a "baked on" date. One of the methods used to prepare bread in some of these in-store bakeries involved dough which had already been prepared and partially baked elsewhere by an outside supplier, then snap frozen and stored. The partly-baked product was then thawed in the Coles store, where the final stage of the baking process was completed. The Australian Competition and Consumer Commission (ACCC) claimed that Coles was engaging in misleading conduct because the signs and labels were making an express or implied representation that the bread products had been entirely baked on the day they were offered for sale.
Issue: Had Coles engaged in misleading conduct in contravention of the Australian Consumer Law?
Decision: In the circumstances Coles' conduct was misleading, in contravention of both s 18(1) and s 33 of the ACL. Coles had also contravened s 29(1)(a) by making a misleading representation that goods have a particular history.
Reason: The court noted that the context in which the signs were displayed was important because consumers buying bread are concerned about freshness and how recently bread has been baked. The court said (at para 146):
'To many reasonable and ordinary people, the phrase "baked today, sold today" in the context that Coles uses it … would convey that the baking process, not some heating or baking process, has taken place today. … [I]t was misleading or deceptive, likely to mislead or deceive, and liable to mislead the public to say to customers on the package or signage as was done, that par-baked frozen product was "baked today" if it was partly (indeed, substantially) baked previously.' Similarly, the words "freshly baked" and "baked fresh" used in the displays were also held to be misleading, as was the label showing the "baked on" date on the packaging.'
Note: Coles was subsequently ordered (in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540) to pay a pecuniary penalty of $2.5 million for this misleading conduct.