New Delhi, May 16 -- Australia's supermarket giants are facing one of the biggest consumer trust crises in modern retail history after a landmark Federal Court ruling found that Coles misled shoppers through fake discount promotions, intensifying scrutiny on rival Woolworths and reigniting public anger over grocery prices during the country's cost-of-living crisis.

The judgment, delivered by the Federal Court this week, represents a major victory for Australia's ACCC and could reshape how retailers across the country advertise discounts and promotions for years to come. At the center of the controversy are accusations that major supermarkets manipulated prices to create the illusion of bargains while Australian families struggled with so...