Retail giant Woolworths hiked the cost of a popular laundry powder to highlight a later price drop, but insists the figure was “genuine”, a court has heard.

The supermarket increased the price of Fab Fresh Blossoms laundry powder to a supplier’s recommended retail price of $14 for a 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 made most of its sales on discounted or promoted products, the court heard.

The consumer watchdog’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,” Davies said.

Hodge pressed Davies about what else the decision might involve.

“Ultimately, well, I would say that’s probably the primary element,” 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.

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 will conclude on Friday. Coles defended similar claims in court over 10 days in February.

-AAP