The Australian Competition and Consumer Commission has issued its first notice of price exploitation to Video Ezy Australasia Pty Ltd.
"Following intensive investigation the ACCC has concluded that Video Ezy, through many of its corporately-owned stores, has, under the price exploitation law, charged an unreasonably high price for certain new release hire videos.
"The ACCC has concluded that Video Ezy unlawfully sought to anticipate the GST in its prices, even though the tax is not due until 1 July 2000," ACCC Chairman, Professor Allan Fels, said today.
This is the first price exploitation notice issued by the ACCC. It was issued under section 75AW of the Trade Practices Act 1974 which gives the ACCC the power to notify companies that it believes they have engaged in price exploitation in relation to the New Tax System changes. Such notices are prima facie evidence that price exploitation has occurred and can be used later in Court action. Corporations found by the Court to have engaged in price exploitation risk penalties of up to $10 million. Individuals, including individual executives involved in corporate decisions, face penalties of up to $500,000.
"The ACCC notes that, at this stage, no franchise outlets have been served with a notice although a number are under investigation.
"Complaints to the ACCC have suggested that staff at outlets told customers that a price rise of around 15 per cent, from $6 to $7, for certain new release video rentals was in effect because of the Goods and Services Tax".
The ACCC was alerted to the price rise by consumer complaints who stated that staff of a number of Video Ezy outlets (corporate and franchise outlets) in a number of different States have advised customers that they had increased new release rental prices because of the GST.
A typical statement was: 'The price rise is to introduce the GST now so that people get used to the idea of paying more. It won't be such a shock when the GST comes in'.
Other examples included: 'We've raised our price to get ready for the GST' (Victoria); and 'We're preparing for the GST' (Queensland).
"Video Ezy management was made aware about the matters in late January and has been responding to the ACCC's inquiries. However the material provided by Video Ezy to date has not caused the ACCC to change its view.
"The ACCC will be seeking suitable remedies for the situation. This may include a rollback of prices, compensatory free video rentals, apologies and/or penalties".
The Video Ezy corporate and franchise outlets account for approximately 30 per cent of the national market for the rental of home videos. Its main competitors are Blockbuster, around 20 per cent, Civic Video and Network Video, each with around 12 per cent. The GST laws were changed with effect from 22 December 1999 to take into account anticipated price rises in relation to the GST.
The ACCC's Price Exploitation Hotline is 1300 302 502 and open from 8 am to 9 pm Monday to Friday.
