The recent Federal Court decisions of Australian Competition
Consumer Commission v Jewellery Group Pty Limited and Australian
Competition Consumer Commission v Jewellery Group Pty Limited (No
2) illustrate why caution is needed when advertising price
Between November 2008 and May 2010 Zamel's Jewellers (who
operated between 93 and 101 jewellery stores) published and
distributed six catalogues and a flyer. The catalogues were
distributed nationally by a letterbox drop, with copies also
available at the stores and online.
These catalogues advertised a number of individual items of
jewellery. The advertisement for each item of jewellery included an
image of the item and a statement of two prices. The higher of the
two prices was struck out (higher price) with the lower price
described as the 'sale price' or the 'now
The Australian and Competition and Consumer Commission (ACCC)
brought an application in the Federal Court of Australia seeking a
declaration that Zamel's had contravened the Trade
Practices Act 1974 by engaging in conduct that was misleading
The ACCC's case was that by each price comparison
Zamel's represented that consumers would save the amount that
was the difference between the two prices. The ACCC submitted that,
in reality, consumers would not have saved that amount because the
jewellery was not sold at the 'higher price', or was only
sold at the 'higher price' in very limited numbers.
The ACCC relied on Zamel's 'price negotiation
policy' to show that employees were encouraged to offer or
negotiate discounts with customers. The result of the 'price
negotiation policy' was that majority of purchases were at a
price less than the 'higher price' before the relevant
The issue for the Court was whether the catalogues contained
representations that were or were likely to be false or misleading.
The representations in the catalogues were that a customer would
have paid the 'higher price' before the sale started.
By reviewing Zamel's sale history it was found that for all
items except one the number of sales that occurred at the higher
price was less than 10% of the total sales for each item.
The Court viewed the advertising as a way to encourage customers
to buy within the specified 'sale period'. This was done by
bringing a potential customers attention to the stark difference
between the 'higher price' and 'sale price'.
The Court found that the savings representations were false and
that Zamel's had engaged in conduct that was misleading and
deceptive or, at least, likely to be misleading and deceptive, in
contravention of the Trade Practices Act 1974.
The penalty imposed on Zamel's included that they pay
$250,000 and publish corrective advertising throughout
Care needs to be taken when advertising price reductions to make
sure any statements made accord with what is actually happening day
to day – not just that the actual words used in any
advertisements are (in a strict sense) correct.
It may be prudent to implement legal review procedures on this
type of advertising to avoid the risk of significant penalties like
those involved in this case.
Winner – EOWA Employer of Choice for Women Citation 2009,
2010, 2011 and 2012
Winner – ALB Gold Employer of Choice 2011 and 2012
Finalist – ALB Australasian Law Awards 2008, 2010, 2011 and
2012 (Best Brisbane Firm)
Winner – BRW Client Choice Awards 2009 and 2010 - Best
Australian Law Firm (revenue less than $50m)
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