A Woolworths manager in charge of pricing has told a court that the supermarket broke its own rules intended to prevent pricing manipulation.

The consumer watchdog’s landmark trial against Woolworths on Tuesday entered its second week of hearings in the federal court, testing allegations the supermarket disguised price increases on hundreds of products between 2021 and 2023.

The Australian Competition and Consumer Commission (ACCC) has accused Woolworths – and rival Coles – of temporarily jacking up prices, then putting products on “sale” at prices higher than their previous long-term shelf price.

On Tuesday, Woolworths’ commercial pricing manager, Callum Davies, was cross-examined by the ACCC’s lawyers about one of 12 products the trial is examining in detail: 2kg Fab “fresh blossoms” laundry powder.

Woolworths sold the laundry powder for $7 for 425 days until March 2022, then doubled its shelf price to $14 – but only for 19 days.

The supermarket then reduced the product to $8 and advertised it as part of its “Prices Dropped” discounts.

Davies told the court he had assumed at the time that Woolworths had followed its own rules and kept the product at its new price of $14 for at least four weeks before it went on to the “Prices Dropped” promotion.

The ACCC’s barrister, Michael Hodge KC, put to Davies: “It seems that it’s clear that the internal Woolworths rules for price establishment periods for a product going on to prices drop were not complied with. Do you agree with that?”

Davies replied: “Yes, I agree.”

Under questioning, Davies acknowledged that the main reason the product was changed to $14 was to establish a higher shelf price so that it could then be advertised as being discounted.

The court heard last week that Woolworths planned with suppliers to increase the shelf price of products in advance so it could later display desired “was/is” price comparisons on promotional tickets.

Davies on Tuesday accepted that when negotiating a price increase with the product’s supplier, he did not intend the product to stay at $14 and that its price would be reduced “in the near term”.

He said $14 would “not have been a competitive price point” for the laundry powder.

The court was told Henkel, the company which owns Fab laundry products, asked Woolworths that its laundry powder be placed on the “Prices Dropped” program as soon as possible, because competitors may have been about to lower their prices.

The trial continues.