The Australian Competition and Consumer Commission has accepted court-enforceable undertakings from Carpet One Australasia Limited after the company's use of allegedly misleading sale catalogues.
It was alleged that three catalogues produced by Carpet One Australasia for its Carpet One retail store members between April and October 2000 promoting certain floor coverings falsely represented savings on these products.
ACCC investigations indicated that floor covering manufacturers and importers whose products featured in the catalogues did not recommend retail prices for their products. Carpet One Australasia acknowledged that the prices represented in the catalogues as a Recommended Retail Price or a Retail Price were the recommended retail prices which it suggested to its retail store members. Carpet One Australasia further acknowledged that most Carpet One stores had previously sold the advertised products for less than the prices represented as either a Recommended Retail Price or a Retail Price.
The ACCC considered the price comparisons misrepresented savings on the advertised products and accordingly involved a breach of the misleading and deceptive conduct provisions of the Trade Practices Act 1974.
Two catalogues also included the representation 12 months interest free on the front cover with a fine print qualification on the back page that the offer was only on selected items. The ACCC considered 12 months interest free to be misleading as a qualification on the catalogues' back page did not given sufficient prominence to dispel the likely impression that the interest-free offer applied to all advertised products.
Carpet One Australasia has offered court-enforceable undertakings to:
- not engage in similar misleading advertising in the future
- publish a corrective notice in its next advertising catalogue
- arrange for the publication in a trade journal an article about the background to the undertakings and outlining the ways in which two-price advertising could breach the Act
- implement a trade practices compliance program
Carpet One Australasia also invited all carpet retailers to attend a trade practices seminar which it held for its Carpet One retail store members. "The undertakings should serve as a warning to businesses making price comparisons", Acting ACCC Chairman, Mr Rod Shogren, said today. "Business must be aware that when it advertises a product and compares its sale price to a higher recommended retail price it risks breaking the law if the higher price does not reflect the price generally charged by competitors or, in cases such as this, does not reflect the business's previous retail price.
"Consumers would have expected the higher retail prices shown to have been set by the manufacturer or importer and to have reflected Carpet One stores' previous prices and the prices at which the goods were generally sold. In this particular matter, the recommended retail prices reflected neither the prices at which most Carpet One stores had previously sold the goods nor the general market price.
"When price comparisons are misleading, consumers cannot make an informed choice. Businesses who use misleading price comparisons may also get an unfair advantage over competitors. Such businesses risk action being taken against them by the ACCC. "This matter should also remind businesses that if they need to qualify offers they make such as 'interest-free', they should ensure that the qualifying statements are clear and prominent so consumers know what the real offer is".