Woolworths increased the price of Fab Fresh Blossoms laundry powder to a supplier's recommended retail price of $14 for one week, before cutting it to $7 or $8 in a series of concurrent promotions.
The Australian Competition and Consumer Commission has accused Woolworths and Coles of temporarily inflating prices to hide increases and mislead customers about discounts.
Under questioning in the Federal Court on Tuesday, Woolworths' commercial pricing manager Callum Davies agreed he never intended the product to stay at $14 for the foreseeable future, but stopped short of accepting it was uncompetitive.
"No, I didn't anticipate selling much volume at that price point, not to say that it's less genuine of a price point," he told the court sitting in Sydney.
"It's highly unlikely I would have ever sold the product for $14 for a 52-week period of time."
The laundry segment traditionally makes most of its sales on discounted or promoted products, the court heard.
Australian Competition and Consumer Commission's barrister Michael Hodge KC suggested the reason the product went to $14 was to establish or create a "was" price for a future price drop.
"That would be one element of it, yes," Mr Davies replied.
Mr Hodge pressed Mr Davies as to what else was at play in the decision.
"Ultimately, well, I would say that's probably the primary element," Mr Davies said.
The court heard Woolworths broke its own rules around price establishment periods, by placing the Fab item on two short-term "yellow ticket" sales during the time $14 was being established as the "regular" price.
Mr Davies was unaware that the resting period, a minimum duration between two promotional periods, had been broken.
"I was definitely aware that there was a promotion on the sample product," he said.
"What I don't believe I had explicitly acknowledged was actually that that promotion had interrupted what had intended to be a four-week uninterrupted (period)."
Last week, ACCC lawyers accused Woolworths of using "subtle magic" in its pricing campaign to disguise price hikes with short-term over-pricing.
On Friday, a handover email from one commercial manager to another labelled a suggested supplier price request from Arnotts as a "joke".
The recipient of the email told the court Woolworths treated every supplier cost request as legitimate.
Woolworths has argued that price growth has been rooted in supplier negotiations, price supply chain issues and inflation wrought by the COVID-19 pandemic.
Woolworths' eight-session hearing is set to conclude on Friday, after Coles defended similar claims in court over 10 days in February.
14°C