ACCC v Carrerabenz Diamond Industries Pty Ltd [2008] FCA 1103
- Further challenges from "was/now" and a large number of charges.
Continuing the theme of misleading jewellery prices, Carrerabenz Diamond Industries' business was the buying and selling of diamonds and other items of jewellery. After purchasing an item of jewellery, it adopted a practice whereby on one side of a price tag a staff member would write two prices, one in red ink which was then immediately crossed out, with a lower price being written underneath it in black ink.
It placed newspaper advertisements advertising diamond sales which described jewellery with a "usual mark.price" and a "crazy price". The ACCC alleged that the advertisements would led a reasonable person to believe that the diamond had previously been offered for sale to the general public at a "usual mark.price" and was now being offered for sale for a limited period at a substantially lower "crazy price". Further, a reasonable person would believe that if they purchased the diamond they would obtain a substantial saving, which amounted to the difference between those two prices, as described. However, in each instance, the diamond in question had never previously been offered for sale to the general public at the "usual mark.price."
Twenty-seven offences were alleged against Carrerabenz Diamond Industries arising from six advertisements placed in metropolitan newspapers. During the course of a trial, Carrerabenz Diamond Industries objected to the form of the charges on the basis that they were duplex. The prosecution made an election which resulted in an amended information and summons and a change of plea by the defendant.
The conduct was held to amount to a breach of section 75AZC(1)(g) of the Trade Practices Act which prohibits false or misleading representations about the price of goods or services.
In determining penalty, the court considered the motive of Carrerabenz Diamond Industries behind its pricing practice. It concluded that what was involved was criminal conduct, not an isolated aberration. It gave weight to the fact that a particular purpose of the Trade Practices Act is consumer protection. The court thought that there was a need for specific and general deterrence in relation to further conduct in the marketplace and that both were pertinent considerations on sentencing:
"The purchase of a diamond by a consumer can be a very special thing, and common experience of most Australians would take one to the proposition that in making that purchase it can involve saving, at some financial sacrifice, for a special occasion. So one should not downplay the mischief involved in this type of conduct.
Because of the large number of charges, there was some controversy as to how the penalty should be aggregated, in particular, whether section 79(2) of the Trade Practices Act has application so as to allows "grouping". Each of the charges alleged an offence against the same provision, but the offences were committed over a period of time.
The court thought that to impose individual penalties would produce an aggregate result which would be disproportionate to the gravity of the criminal conduct, having regard to the totality principle. In these circumstances, the court concluded that one penalty of $220,000 should be imposed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.