Coles will “vigorously defend” the proceedings the competition watchdog is bringing against it over claims made by Coles about the freshness of its bread.
The Australian Competition and Consumer Competition commenced proceedings yesterday in the Federal Court against the supermarket, alleging Coles has engaged in false, misleading and deceptive conduct.
The ACCC claims Coles promoted its bread as “Baked Today, Sold Today” and “Freshly Baked In-Store” when the bread was actually partially baked and frozen in Ireland then transported to Coles stores and “finished” in store.
The legal action covers various Cuisine Royale and Coles Bakery branded bread products. The ACCC says the claims by Coles were likely to mislead consumers into thinking the bread was prepared from scratch in Coles’ in-house bakeries on the day it was offered for sale and that it was entirely baked on the day it was offered for sale.
ACCC chairman Rod Sims said Coles’ claims mislead consumers and had a detrimental impact on the supermarket’s competitors.
“Misleading credence claims can undermine the level playing field and disadvantage other suppliers,” he said in a statement.
“In this case those suppliers are the smaller, often franchised bakeries that compete with Coles.”
The ACCC is seeking declarations, injunctions, pecuniary penalties, orders that Coles review its compliance program, orders that Coles publish corrective notices on its website and in Coles supermarkets that have in-store bakeries, and costs.
Coles is understood to be perplexed at being the focus of the ACCC’s action as it claims every national retailer par-bakes at least some of its products.
Anna Kelly, spokesperson for Coles, said the supermarket was fully examining the ACCC’s claims.
“Coles intends to vigorously defend the action brought against it by the ACCC about ‘Baked Today, Sold Today’ and ‘Freshly Baked In-Store’ advertising claims for our in-store bread,” she said in a statement.
But independent bakeries like Melbourne’s Movida Bakery and national franchises including Bakers Delight have hit back at claims they also par-bake products.
Kendra Teasdale, group marketing manager at Bakers Delight, told SmartCompany it bakes all its bread fresh from scratch.
“Under no circumstances do we ever use par-baked dough or bread,” she says.
“We pride ourselves on being Australian owned and operated and baking all of our bread on-site at each of our bakeries, sourcing bread off-site or from overseas is not a consideration.”
The ACCC’s decision to bring litigation against Coles is unusual, according to Laura Hartley, managing partner at law firm Addisons.
“The ACCC usually enters into court enforceable undertakings and doesn’t necessarily go through a full court process,” she says.
“It sounds like Coles is a bit surprised this action has been taken, and Rod Sims is denying this has anything to do with the supermarket enquiry, but those in the industry would query that.”
Hartley says credence claims is one of the ACCC’s priorities for this year.
“The ACCC has always been very concerned about having a level playing field and it doesn’t want the big guys to get away with making false claims when the little artisan bakeries and franchises are struggling,” she says.
“These people are making bread which is truly fresh and then the big players are using this par-baked bread and trying to make a fresh claim when that is not legitimate.”
Hartley also warns small businesses that the ACCC is likely to investigate other bakeries and stores besides Coles.
“I am sure this is the beginning of the ACCC working its way through the bread industry,” she says.
“Small players who have not checked their claims should take notice of this because the ACCC policy generally is to work its way through an industry. We’ve seen that with the juice industry and the telecommunications industry.”
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
