Supermarket giant Coles has been fined $2.5 million and ordered to pay costs after breaking Australian Consumer Law by falsely advertising bread products as "freshly baked" and "baked today".
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The judgement was handed down in the Federal Court on Friday, after a two-year battle with the competition regulator sparked by complaints from former Victorian premier Jeff Kennett about a loaf of Coles bread made in Ireland.
"The contravening conduct in this case is substantial and serious," Chief Justice James Allsop said.
"Notwithstanding the absence of any specific evidence as to loss or damage by a consumer or a competitor, it is clear that the significant potential to mislead or deceive and thus to damage competitors, the duration of the conduct, and the fact that the goods in relation to which the impugned phrases were used were "consumer staples" indicate that the objective seriousness of the offending conduct was considerable."
Coles said after the decision that it "did not deliberately set out to mislead anybody, but we accept that we could have done a better job in explaining how these products are made."
"We are proud of the quality of our bread, whether baked from scratch in-store or 'par baked' by our Australian suppliers and finished in our ovens," a spokesman said.
In September the Federal Court banned Coles from advertising its bread was made or baked on the same day it was sold and ordered the supermarket to display notices about its false advertising.
Coles was also ordered to display a Federal Court notice in its stores and on its website telling shoppers that it had broken Australian Consumer Law by falsely advertising bread products as "freshly baked" and "baked today".
The Australian Competition and Consumer Commission launched proceedings against Coles in June 2013, accusing it of misleading consumers to think bread was made on the day at the store when, in some cases, the bread had been partially baked and frozen, months earlier in factories in Denmark, Germany and Ireland.
The retailer was found by the Federal Court to have misled and deceived consumers by advertising its 'Cuisine Royale' and 'Coles Bakery' bread as freshly baked.
Federal Court Chief Justice James Allsop said at the time that Coles had breached three sections of Australian Consumer Law.
ACCC head Rod Sims will hold a press conference this afternoon.
with Beau Donnelly
