Supermarkets advertising so-called "was/now" discounts have been put on notice as the consumer watchdog considers allegations of false or misleading specials.
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The promotion involves showing how a product cost more in the past but has since been marked at a lower price.
It's being examined by the Australian Competition and Consumer Commission after customers raised concerns, a spokesperson confirmed.
"We have been closely considering the reports received from consumers alleging false or misleading 'was/now' or other pricing 'specials' advertising by supermarkets and whether they may raise concerns under (Australian consumer law)" they said.
"These assessments are ongoing, so we are unable to comment further at this stage."
The watchdog said it would take action if and when necessary and had done so previously on similar issues against many companies.
"Taking legal action requires careful investigation and gathering of evidence and it is difficult to predict the timing of any potential action," the spokesperson said.
The government is reviewing competition laws and a Senate inquiry into price setting at supermarkets begins in several weeks.
A Woolworths spokesperson said the company worked to ensure it complied with consumer laws while communicating prices clearly and accurately.
"We know Australians are feeling the strain of cost of living and we are working to deliver relief in their weekly grocery shop, with dropped prices on hundreds of products and more than 6000 specials every week," the spokesperson said.
"We are committed to offering our customers value while working with our suppliers to sensitively manage economy-wide pressures."
A Coles spokeswoman said it was not company practice to comment on day-to-day interactions with regulators.
"Coles is not aware of any actual or threatened regulatory litigation in relation to pricing issues," the statement to AAP said.
Queensland Premier Steven Miles will meet representatives from the two major supermarkets on Thursday, where he would raise concerns from farmers.
He said the federal government's review of the grocery code was an important first step.
"I personally believe that code should be mandatory and not voluntary, and that there should be sufficient penalties to deter supermarkets from price gouging," Mr Miles told reporters on Tuesday.
Australian Associated Press
