The Federal Court has made orders by consent in the Australian Competition and Consumer Commission's proceedings against companies and individuals in the Harvey Norman group for alleged breaches of the Trade Practices Act 1974.
The ACCC took action in 2002 against three companies in the Harvey Norman group, two Harvey Norman corporate group individuals and 15 Harvey Norman franchisees alleging bait advertising and misleading or deceptive conduct in breach of the Act.
It was alleged that in the period immediately before the introduction of Goods and Services Tax national catalogue, television and radio advertising was conducted for Harvey Norman Computers & Communications franchise stores which featured a promotion for GST-ready accounting software, Quicken Quickbooks, for $199 that included a bonus software bundle valued at over $900.
The ACCC alleged the Harvey Norman Quicken Quickbooks promotion was advertised, and continued to be advertised, when the parties were aware that none of the bonus software bundle was available or was available in insufficient quantities to meet consumer demand.
The ACCC further alleged that representations made in the same advertising misled consumers in relation to the eligibility for GST-related taxation benefits on purchases of digital cameras and "approval" of goods for GST Start-Up Assistance from the Federal Government.
Derni Pty Ltd, a subsidiary of Harvey Norman Holdings Ltd, consented to declarations being made by the Federal Court that it had made misleading or deceptive representations in contravention of section 52 of the Act and, in advertising the Quicken Quickbooks promotion for the benefit of Harvey Norman stores, had also been knowingly concerned in bait advertising by the stores in contravention of s. 56.
Harvey Norman Holdings Ltd also voluntarily provided court-enforceable undertakings to the ACCC that it will continue to review its trade practices compliance program with the assistance of an independent professional and arrange for an independent annual audit of its program for three years.
These undertakings also included a statement of regret by companies in the Harvey Norman group to the ACCC in relation to the circumstances that led to these proceedings.
A contribution to the ACCC's costs in the sum of $270,000 was also agreed to between the parties.
ACCC Chairman, Mr Graeme Samuel, said Harvey Norman now recognised the necessity that an organisation, such as it, which had such constant interaction with customers, must have in place effective compliance procedures to avoid breaches of the Act.
"This particularly relates to misleading and deceptive conduct that is so harmful to consumers.
"Harvey Norman has expressed a willingness to improve on its past relationship with the ACCC", Mr Samuel said. "We look forward to Harvey Norman taking positive steps in this context.
"Ultimately any business organisation's relationship with ACCC will fundamentally depend upon its compliance with the Act and on it dealing with consumers in a fair and honest manner.
"ACCC action in this matter serves again to highlight the responsibilities that all retailers have under the Act to trade fairly and openly in relation to both consumers and competitors".