The Federal Court of Australia has held that a jewellery company
engaged in misleading or deceptive conduct in relation to its dual
The Australian Competition and Consumer Commission brought the
proceeding against The Jewellery Group Pty Ltd, trading as
Zamel's, in relation to a number of catalogues and flyers
listing 'then' and 'now' prices.
Justice Lander found that Zamel's regularly negotiated
discounts with customers outside sale periods and therefore the
'then' price was in fact rarely paid. Readers unaware of
that practice of discounting would have reasonably interpreted the
difference between the 'then' and 'now' prices as
the saving they would make by purchasing the jewellery during the
sale period. His Honour therefore found that the represented saving
was false and amounted to misleading or deceptive conduct.
The Court will hear the parties as to penalties in December.
The Contravening Conduct
The proceeding related to six catalogues and a flyer that were
published and distributed by Zamel's between November 2008 and
May 2010. The ACCC alleged that the savings represented by
Zamel's in those advertisements amounted to contraventions of
sections 52 and 53(e) of the Trade Practices Act 1974
The relevant audience
The Court accepted that there would be a group of savvy
customers who would know that they could always negotiate as to the
price of jewellery and therefore would not be misled or deceived by
the advertisements. However, it held that the relevant audience
also included those who were unaware of this discounting practice,
particularly given that the advertisements had been widely
distributed through letterbox drops and the internet.
The Court noted that if a retailer has a vigorous ongoing
discounting policy, the purpose of dual pricing would be to attract
the customers unaware of that policy. It commented that such
advertisements would offer little inducement to customers aware of
a vigorous ongoing discounting policy, as such advertisements would
do no more than signal to those customers that they could purchase
the jewellery for the lower price without having to negotiate to it
first. In contrast, the unaware customers would understand that
they could purchase the items for a lower price during the sales
period alone and would therefore be more likely to be induced to
purchase during that sales period.
The Court rejected the respondent's argument that a reader
would interpret the figures as merely representing an offer price.
It held that the advertisements represented to customers unaware of
the ongoing discounting policy that a purchaser of an item of
jewellery in the catalogue or flyer would make a saving of the
difference between the two prices.
Conduct was misleading or deceptive
The Court held that the respondent pursued a vigorous
discounting policy outside of sales periods and that as a result,
the 'was' price was rarely paid by a Zamel's customer.
Therefore, a significant number of unaware readers of the
advertisements would not have paid the 'strike through' or
'was' price and achieved the represented saving if they had
purchased the jewellery before the sales period. On this basis the
Court held that the savings representation was false and the
respondent had engaged in conduct that was misleading or
Implications for business
There have been a number of cases in which the ACCC has brought
proceedings against businesses who engage in dual pricing
advertising. This case serves as another warning to businesses to
take great care when engaging in the practice. In particular,
businesses that operate in an environment where negotiating and
discounting are common practice should ensure that they can
demonstrate significant sales at the pre-sale price before engaging
in dual price advertising.
1The proceedings were brought pursuant to the
Trade Practices Act as the relevant conduct occurred prior
to 1 January 2011, which is prior to the operation of the
Competition and Consumer Act 2010 (Cth).
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guide to the subject matter. Specialist advice should be sought
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