In a penalty hearing in the Federal Court on Tuesday, the ACCC said it was seeking penalties of at least $4 to $5 million over the Australian consumer law breaches. Colin Golvan, SC, said a hefty fine was appropriate due to the size of the company, scale of conduct and consumer reach.

"This case is one in which consumers are led to the cash register on the basis of misconceptions about the manufacturing process," he said.

But lawyers for Coles debated the severity of the misleading conduct, saying continuing strong sales of partially baked bread, despite revelations it was not made wholly in-store, showed the consumer "doesn't care".

Philip Crutchfield, SC, for Coles, said "just because we're big, we shouldn't get hit with a record fine".

Coles has already been banned for three years from advertising its bread was made or baked on the same day it was sold when this is not the case, and was last year ordered to display notices in-store advising shoppers of the consumer law breach.