Australia's Federal Court ruling against Coles Group (ASX:COL) in a misleading discount pricing case is negative but balanced, as the price increases were commercially justified, Jefferies said in a note on Thursday.
According to the judgment, the retailer deceived shoppers by advertising discounts on products that, in many cases, were being sold at higher prices, in a case first brought by the Australian Competition and Consumer Commission in 2024.
However, the court also noted that Coles may have been "competitively disadvantaged" had it not acted as it did and this could influence the decision on penalties and may soften criticism from consumers, the firm said.
"With minimum price establishment period now set, the field is now level and we expect the industry to remain rational," Jefferies said.
It expects major retail chains to benefit from higher inflation but sees margin expansion as limited due to continued political and media scrutiny.
Jefferies maintained a buy rating and price target of AU$25.50 on Coles.