The Federal Court of Australia has handed down an important
decision on the practice of 'Was/Now' pricing.
The Court held that Prouds Jewellers Pty Ltd
(Prouds) had engaged in misleading and
deceptive conduct in breach of the Trade Practices Act
1974 (Cth) because goods had not been offered at the
'was' price immediately before the commencement
of the relevant promotion.
ACCC Chairman Graeme Samuel has hailed the decision as a
warning of the need for pricing accuracy in advertising
materials, stating that 'advertised discounts must
be real and not illusory..... If you make a was/now price
comparison you must have genuinely offered the product at the
'was' price for a reasonable period immediately
before your sale promotion'.
However, the case establishes no more than the goods must
have been offered (which in most cases means ticketed)
at the 'was' price immediately before the sale
The ACCC action concerned 17 jewellery items advertised by
reference to 'was/now' pricing in two Prouds
However, immediately before the promotion, it appears that
the goods were not on display and available for sale at the
'was' price. In fact, Prouds had offered
several items for sale at prices less than the advertised
'was' price. So, for example, in the sale that
took place in February, the goods in question had last been on
display at the 'was' price in December.
Further, seven items had never been offered for sale at the
listed 'was' price.
The Federal Court Decision
The Court ultimately held that Prouds' conduct gave
rise to two misleading representations, both of which related
to the price at which Prouds had previously offered (rather
than sold) the items:
The 'was' price was the usual price
which the item was offered for sale or sold before the
sale. Prouds argued that the 'was' price
should be referrable not only to the period immediately
preceding publication. That is, they argued it was acceptable
to advertise a 'was' price if the
'was' price existed at some point in time
before the promotion. His Honour rejected this, holding that
it was misleading, 'to identify...a
'was' price which did not represent the price
which the item had been offered for sale and would have been
purchased by the hypothetical consumer immediately
before the sale'.1
The items had been offered for sale at the
'was' price before the sale
period.2 His Honour held this
representation was similarly misleading and further found
that Prouds was not concerned as to whether the items had
actually been offered for sale at the relevant
'was' prices prior to the promotion.
The ACCC also claimed that 'was/now'
advertising contained further representations, two of which
have wider interest:
Specific items were sold at the 'was'
price immediately before the sale period. This was
rejected on the basis that the judge, '[did] not
think a hypothetical consumer would treat a "was"
price as saying anything about the price as which actual
sales had been achieved before the introduction of the
There was a substantial volume of sales before the
sale period of the items at the 'was'
price. This failed on the basis that the hypothetical
consumer would not have contemplated the volume of sales when
observing 'was/now' pricing.
It is always dangerous to assume too much about the wider
implications of specific misleading conduct cases. However, it
is clear that at least in the context of the jewellery
industry, where over the counter discounting is widespread and
well known by consumers, it may not be necessary to prove that
actual sales had taken place at the 'was'
price, so long as the 'was' price is
It is clear that if Prouds had offered the relevant items at
the advertised 'was' prices for a
'reasonable period' immediately prior to each
promotion, they may have succeeded in defending the
application. Indeed, Justice Moore commented that,
'in my opinion there would be no contravention...
if the goods had been offered for sale at the
'was' price for a period of two months
preceding the sale'. He added, however, that
'there can be no precision about the length of the
anterior period', noting that it cannot be
'unduly short' but must be
'a period of substance'4.
As always, the 'was' price must be a genuine
The decision, like any misleading conduct case, turns on its
specific facts, so it remains to be seen whether the ACCC will
seek to apply the decision beyond the jewellery industry or
whether the ACCC will seek to limit its application solely to
its precise facts.
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