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Coles admits to misleading campaign during AU$1 milk wars

By Ankush Chibber , 07-Apr-2014

Supermarket giant Coles painted a misleading picture of the dairy industry via a social media campaign at the height of the A$1 milk wars last year, Australia’s top consumer watchdog has found.

According to the Australian Competition and Consumer Commission, the boxy has accepted a court-enforceable undertaking from Coles following an investigation into the video and cartoon Our Coles Brand Milk Story, which was published on social media. 

The video and cartoon ran from February 7, 2013 to May 5, 2013 on a variety of platforms including YouTube, Coles’ website and its Facebook page, and was promoted in links from Twitter and other social media.

The ACCC investigated the campaign following complaints from dairy farmer organisations about representations made by Coles, which came at a time of intense public debate about the impact of AU$1 milk on Australian dairy farmers.

You should’ve known

“Coles represented in a video and cartoon on social media that the farmgate milk price increased from 86 cents per two litre bottle of Coles-brand milk in 2010-11 to around 90 cents in 2011-12,” Rod Sims, chairman at ACCC, said.

“When in fact this was an estimate and final industry figures showed the 2011-12 farmgate milk price actually decreased to 84 cents,” he added.

The ACCC found that Coles based the 90 cent figure on an August 2012 report containing an early estimate of the 2011-12 farmgate milk prices and had the script reviewed by the same industry expert that prepared this report.

However, the ACCC added, that at the time it published the material Coles was aware, or should have been aware, of other reports that predicted that final industry figures would show a decrease in the farmgate milk price to 84 cents in 2011-12.

According to the statement, Coles has admitted that its making of these representations would be likely to have contravened section 18 of the Australian Consumer Law, which prohibits misleading or deceptive conduct.

The retailer will now publish corrective advertisements on the same online platforms that the original representations were published.

“The ACCC is concerned to ensure that companies are applying the same degree of Australian Consumer Law compliance to representations made in social media versus other forms of advertising,” Sims said.

“For this reason, the ACCC considered it was important that Coles used social media to correct any misleading impressions formed by viewers.”

Not facts

The ACCC also found that Coles represented that it was a “fact” that on average Coles’ margin on Coles-brand 2 litre milk decreased from 55 cents in 2010-11 to 10 cents in 2011-12 and that processors received around AU$1 per 2 litres of Coles-brand milk in each of 2010-11 and 2011-12. 

In reality however, the watchdog found, these figures were estimates that were unable to be substantiated.

Coles also said that its price cut resulted in increased consumption of drinking milk and subsequently increased Australian dairy industry production.

However, the regulator found that any implied connection between lower retail milk prices and increased production of milk was only an opinion, which ignored the impact of other relevant factors on milk production.

“Businesses should also be aware that even where a representation might seek to inform the public about a matter that is the subject of political debate, if it goes further and encourages or promotes the sale of a product or service, it must be compliant with the Australian Consumer Law,” Sims said.

According to the ACCC, the legal undertaking also requires Coles “for a period of three years, [to] not make misleading or deceptive representations in relation to the impact of reductions in the retail price for Coles brand milk on the farmgate milk price, Coles’ or processor margins on Coles brand milk, and/ or Australian milk production generally.”

Coles also has to “review its Australian Consumer Law compliance programme as it relates to the application of section 18 of the Australian Consumer Law to advertising and promotional strategies relating to Coles brand milk, including social media, and to identify specific compliance processes and training for employees of the Coles Media Relations Team to ensure the conduct of concern to the ACCC does not occur again.”

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