Watchdog takes aim at Australia's supermarket duopoly

CANBERRA

Australia's competition watchdog sued the country's two biggest grocery chains on Monday, alleging "discount" offers on hundreds of staples were more expensive than original prices.

The regulator said Woolworths and Coles, which together hold about 65 percent market share, had deliberately jacked-up prices for toothpaste, yoghurt, butter, instant coffee, tampons and more.

These temporary price spikes were then reduced in widely touted discount offers, which were higher than the goods originally cost.

The Australian Competition and Consumer Commission pointed to a family packet of Oreo biscuits, which typically sold for Aus$3.50 ($2.39).

Woolworths lifted the price to Aus$5.00 before promoting a "Prices Dropped" promotion of Aus$4.50, one dollar higher than originally advertised.

"We allege that each of Woolworths and Coles breached the Australian consumer law by making misleading claims about discounts, when the discounts were, in fact, illusory," said commission chair Gina Cass-Gottlieb.

Both supermarket chains had "sold tens of millions of the affected products and derived significant revenue from those sales," Cass-Gottlieb said.

"The false or misleading representations concerned the price of household staples at a time of increasing cost of living pressures," read an outline of the commission's legal case.