ACCC settles 'Beat the GST' litigation with discount electrical centre

The Australian Competition and Consumer Commission has settled its legal proceedings against Discount Electrical Centre, ACCC Chairman, Professor Allan Fels, said today.

"The ACCC commenced legal action a month ago after Discount Electrical made representations about the impact of the introduction of the GST on prices of electrical goods including televisions and DVD players. Discount Electrical has given undertakings to the Federal Court, Melbourne that it will not make representations that the price of televisions and DVD players will increase as a result of the introduction of the New Tax System.

"Discount Electrical also gave an undertaking to pay reasonable compensation to all persons who have entered into agreements to purchase televisions and DVD players in reliance on the representations for any loss incurred as a result of the purchase. Discount Electrical also undertook to place corrective advertising and to institute a trade practices compliance program. Discount Electrical was ordered to pay the ACCC's costs of the proceeding in an agreed sum.

'The case highlights the importance of ensuring advertising claims about the impact of the GST are accurate."

Background

Discount Electrical placed an advertisement in the Melbourne Herald Sun

on 31 May 2000. The advertisement made statements about the likely impact of the GST on prices for electrical goods. The ACCC alleged the statements amounted to a representation that the price of electrical goods would increase by 10 per cent after 1 July 2000. 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 alleged the statement amounts to a representation that the introduction of the GST would lead to an increase in the price of electrical goods. However as the new televisions and DVD players in the advertisement and catalogue were previously subject to Wholesale Sales Tax of 22 per cent the ACCC believed prices would decrease as a result of the tax changes. The ACCC alleged that Discount Electrical engaged in misleading and deceptive conduct contrary to section 52 of the Trade Practices Act 1974.