Supermarket giant Coles has told the Federal Court consumers should not assume the word “baked” means “baked from scratch”, as it defends allegations of misleading conduct.

Instead, artisan-type breads distributed by Coles are reportedly par-baked and frozen before being finished-off at in-house bakeries.

In June, the Australian Competition and Consumer Commission (ACCC) launched legal action against the Wesfarmers-owned supermarket chain and is seeking penalties, including fines for allegedly deceiving and misleading customers.

“The ACCC is concerned that Coles’ lack of distinction in its promotional representations between bread products that are freshly prepared from scratch and par-baked products is misleading to consumers and places competing bakeries that do freshly bake from scratch at competitive disadvantage,” a spokesperson from the consumer watchdog said.

The retailer needs to prove an average consumer should or would assume “baked” could mean something other than “baked from scratch” if it is to avoid prosecution.

The case resumed on August 13. If Coles is found to have breached the law, it could face penalties of up to $1.1 million for each of its breaches.