Court declares Audi Q7 motor vehicle advertising misleading

The Federal Court Melbourne today declared that Audi Australia Pty Ltd had engaged in false, misleading or deceptive conduct in relation to advertisements for its Q7 Series motor vehicles. 

In addition to making the declarations, the court has also ordered that Audi Australia publish an advertisement in The Age and The Sydney Morning Herald newspapers referring to the civil proceedings and the orders made by the court. The court ordered Audi to pay the ACCC's costs, fixed at $25,000.

Audi Australia has also given an undertaking to the court that it will not, for a period of three years, in relation to the Audi Q7 Series of motor vehicles engage in the same form of conduct as alleged in the proceedings by the ACCC. It will also implement a trades practices compliance program for a period of three years.

The ACCC alleged Audi Australia through advertisements published in The Age and The Sydney Morning Herald on certain dates between 23 June 2007 and 18 August 2007, together with information available on its website and at its dealerships, represented the Audi Q7 Series motor vehicles including the Q7 3.6SE model, had seven seats as a standard feature when in fact five seats was the standard configuration.

The ACCC further alleged certain of those advertisements represented the Audi Q7 3.6SE  was available for purchase from $79,900 when in fact a purchaser would have to pay additional fees or charges for dealer delivery, statutory charges and two optional seats (in order to make it a seven-seater). The ACCC was concerned the advertisements would lead a consumer to conclude that $79,900 was the 'drive away' price for a seven seat Audi Q7 3.6 SE when in fact the drive away price was considerably more (with one Melbourne dealer quoting $88,420).

ACCC Chairman, Mr Graeme Samuel, noted Audi Australia's co-operation in settling the matter by submission of consent orders and an undertaking.

"I have previously written to motor vehicle industry participants warning them that unless there was improvement in their level of compliance in advertising they risked formal legal action", Mr Samuel said. "The proceeding against Audi Australia reflects the seriousness with which such conduct is viewed and the ACCC's shift from an educative approach to a litigious stance.

"It is perhaps now timely that a further warning be given to participants in the motor vehicle industry. The warning is this - next time such conduct may be considered with a view to instituting a criminal prosecution."

The ACCC's proceeding against Audi Australia was filed in the Federal Court on 8 November 2007 utilising the Fast Track List in the Victorian Registry. The ACCC alleged contravention of sections 52, 53(a), 53(c) and 55 of the Trade Practices Act 1974.

Background

The ACCC has received many complaints over the years concerning advertising practices in the motor vehicle industry. Those complaints have raised issues of concern in relation to price representations and the use of disclaimers and pictorial representations.

In addition to selective enforcement action the ACCC has also endeavoured to educate and encourage participants in the motor vehicle industry to adopt best practice in their advertising.

In March 2005 the ACCC launched its publication Guidelines for pricing in the motor vehicle industry which was developed in consultation with the motor vehicle industry. The guideline identifies practices that have the potential to breach the misleading or deceptive conduct provisions of the Act but also provides useful information about those practices that could be adopted to instead ensure advertisements comply.