ACCC takes Discount Electrical Centre to court over GST claims

The Australian Competition and Consumer Commission has commenced proceedings against Discount Electrical Centre (Australia) Pty Ltd over a recent newspaper advertisement and sale catalogue which made claims about the likely effect of the Goods and Services Tax on certain electrical goods.

Discount Electrical placed an advertisement in the Melbourne Herald Sun on 31 May 2000. The advertisement made statements about the likely impact of the Goods and Services Tax on prices for electrical goods. The ACCC alleges that the statements amount to a representation that the introduction of the Goods and Services Tax will lead to a 10 per cent increase in the price of electrical goods after 1 July.

Discount Electrical also issued a catalogue for letterbox distribution promoting a sale of electrical goods. The catalogue contained the statement 'Beat the GST Buy Now'. The ACCC alleges the statement amounts to a representation that the introduction of the GST will lead to an increase in the price of electrical goods after 1 July.

However as the new televisions and DVD players in the advertisement and catalogue are currently subject to Wholesale Sales Tax of 22 per cent the ACCC believes price will decrease as a result of the New Tax System. As the new whitegoods in the advertisement and catalogue are currently subject to 12 per cent WST the ACCC believes any increase in the price of these products as a result of the introduction of the New Tax System is likely to be relatively small. The ACCC believes Discount Electrical has engaged in misleading and deceptive conduct contrary to section 52 of the Trade Practices Act 1974.

The ACCC is seeking an interim injunction restraining Discount Electrical from making representations to the effect that the price of electrical goods will increase after 1 July as a result of the introduction of the New Tax System. The ACCC will seek a range of remedies at trial including:

• declaration that the conduct was misleading and deceptive in contravention of section 52;
• an injunction restraining Discount Electrical from making representations that the price of electrical goods will increase after 1 July as a result of the introduction of the GST;
• an injunction directing Discount Electrical to give refunds to consumers who have been misled by the conduct;
• an injunction directing Discount Electrical to publish corrective advertisements; and
• an injunction directing Discount Electrical to implement a trade practices compliance program.

 The ACCC raised its concerns about the catalogue and advertisement with Discount Electrical several weeks ago. Legal proceedings were instituted only after Discount Electrical was given a reasonable opportunity to address the ACCC's concerns.