Supermarket giants Coles and Woolworths will fight .
Lawyers for both supermarkets appeared in the Federal Court on Wednesday after the Australian Competition and Consumer Commission (ACCC) launched separate legal proceedings in September.
The watchdog says the companies violated consumer law by misleading shoppers on hundreds of popular supermarket items with their "Down Down" and "Prices Dropped" campaigns.
It's alleged both supermarkets used similar ploys to increase the prices of hundreds of products before dropping them as part of their respective campaigns.
The products — including dairy, pet food and personal care — sold for less than the inflated prices but still more than the regular price that applied before the price spike.
Cameron Moore, representing Woolworths, told the court the company had not initiated the temporary spikes in prices.
Both supermarkets claim they were following the requests of suppliers, who pushed for the increase due to their rising costs.
"The suggestion is that Woolworths initiated temporary price spikes and that's not correct factually," Moore said.
"We say factually, the ACCC's case is misconceived."
John Sheahan, representing Coles, said the case was not as simple as alleged by the ACCC, and any outcome could have significant implications for the whole industry.
Coles and Woolworths have until 29 November to file a written response to the ACCC's allegations.
The parties will then return to the Federal Court in December for another case management hearing.
Justice Michael O'Bryan did not set down an exact date for the hearing.
The legal action follows a and calls for the sector to be overhauled to ensure people can afford everyday items during a cost of living crisis.
