Court orders corrective advertising over Prouds' catalogue claims
The Federal Court of Australia yesterday ordered Prouds Jewellers to undertake corrective advertising after the Australian Competition and Consumer Commission successfully alleged misleading advertising in some Prouds' catalogues.
The ACCC had alleged that the advertising of certain jewellery items in Prouds' mass distribution catalogues published to coincide with Valentine's Day and Mother's Day in 2006 contravened the Trade Practices Act 1974.
On 15 February 2008 the court found that 'Was/Now' discount advertising by Prouds was misleading in breach of the Act*.
The Federal Court yesterday made declarations as to how Prouds' Was/Now pricing contravened the Act and ordered that Prouds:
place an A3 size corrective notice at the point of sale of every Prouds store in Australia for a period of no less than three months
place corrective advertisements in a number of national and local newspapers, and
pay a proportion of the ACCC's costs.
Prouds had previously consented to orders that Prouds implement a trade practices law compliance program.
In ordering corrective advertising, Justice Moore noted: "...the contravening conduct did involve something more than a trifling incident of misleading and deceptive conduct that was doubtless intended to influence consumer behaviour. Prouds' use of comparative pricing is an essential, if not the fundamental, feature of its marketing. Particularly in circumstances where no injunction is granted, it is desirable, in my opinion, to order corrective advertising as a means of creating an environment in which, in this case, Prouds will be more assiduous in ensuring that it does not repeat the contravening conduct, knowing that consumers are aware that it occurred in the past."
Justice Moore said he would order declarations as: "They will vindicate ACCC's claims, notwithstanding that it failed to satisfy the court that the "was" price should be viewed as the previous selling price. The making of declaratory orders will also mark the court's disapproval of Prouds' conduct which, at best, involved indifference about whether its promotional material fairly or accurately informed consumers about the extent to which, in truth, the promotional sale provided real and material benefits to the consuming public."
The ACCC is considering those aspects of the court's judgment where it was unsuccessful in relation to the relevance of whether items had previously been sold at the was price.
"This judgment delivers important messages as to the power of comparative advertising and the corresponding importance of ensuring such comparisons will not mislead consumers," ACCC Chairman, Mr Graeme Samuel, said today.
The advertising was in the form of price comparisons such as "Was $199 / Now $99.50" and appeared in Prouds' February 2006 Summer of Love catalogue and its May 2006 Love You Mum catalogue. Numerous jewellery items were advertised in this way in each of these catalogues. The case related to the 'Was/Now' price advertising of 17 items that appeared in both catalogues.
Justice Moore concluded that the 'Was/Now' advertising conveyed to consumers that the jewellery items had been offered for sale for a reasonable period immediately before the catalogue promotion at the 'Was' price.
He found that each of the 17 items had not in fact been offered at the 'Was' price in that period and concluded that the 'Was/Now' advertising of each of the items in both catalogues was misleading.
