The Australian Competition and Consumer Commission has accepted court-enforceable undertakings from Laura Ashley (Australia) Pty Ltd in respect of two-price advertising.
From around December 2005 to December 2007, Laura Ashley adopted a promotional strategy based on establishing a 'regular price' for a product line by launching the product in a limited number of stores for a limited time. Subsequent supply to all other stores Australia-wide and subsequent discounts all relied on the 'regular price' as the starting point for any discounts or sales. The reliance on the 'regular price' continued, in some instances, for over 12 months, notwithstanding that the product may not have been offered for sale anywhere in Australia at that price for periods of up to 12 months prior.
The ACCC considers that pricing practices such as these are likely to mislead consumers and contravene sections 52 and 53(e) of the Trade Practices Act 1974.
In a swift response to the ACCC's concerns, Laura Ashley ceased offering goods for sale with a price label bearing two prices and undertook to immediately review its pricing policy for bed linen and all homewares products for compliance with the Act.
Laura Ashley has given the ACCC undertakings under section 87B of the Act that it will:
- refrain from offering for sale merchandise items bearing two price labels, one price being higher than the other, where those items have not been offered for sale in relevant Laura Ashley stores at the higher ticketed price reasonably recently and for a reasonable period of time
- refrain from offering for sale merchandise items at a percentage off a higher ticketed price where those items have not been offered for sale at the higher ticketed price immediately prior to percentage off and/or promotional sales
- display an Information Notice at the point of sale in each of its stores alerting customers to concerns raised by its past two-price advertising practices
- publish a like Information Notice in the June/July 2008 edition of The ARA Retailer, the Australian Retailers Association's industry magazine, and
- implement a trade law practices compliance program.
ACCC Chairman, Mr Graeme Samuel, has reminded businesses that they need to ensure that any comparisons they make about prices are accurate.
"Two-price advertising, or comparison pricing as it is also known, is a very powerful selling technique because of its appeal to bargain-hunting consumers," he said.
"Businesses planning to mark down goods need to be able to prove that the discounts being offered are a genuine saving and that the goods were readily available to consumers at the higher price, reasonably recently. Discounts need to work off genuine selling prices, not constructed justifications."
A copy of the undertaking will be available on the ACCC's website.