The Australian Competition and Consumer Commission has accepted court enforceable undertakings from Repco Limited after the ACCC raised concern that Repco's '$1 Million Sizzling Sound Sellout' in September 2005 may have contravened the bait advertising provisions of the Trade Practices Act 1974.
The sale was advertised as beginning on 8 September 2005 and ending on 25 September 2005. To promote the sale, Repco circulated 3.9 million catalogues to consumers' letterboxes and via in-store distribution stands as well as advertising the sale on its website www.repcoshop.com.au.
"Five of the products advertised in the catalogue were advertised at a discount of between 66 per cent and 92 per cent off their original pre-sale price, four on the catalogue's front page", ACCC Chairman, Mr Graeme Samuel, said today.
"More than one third of Repco's 290 stores Australia-wide did not have any of the five products available for sale during any part of the sale period. Of those stores that did hold stock, most did not have any stock available to consumers after the first day of the sale".
Repco has acknowledged that the shortage of advertised stock has generated criticism from many of its customers. It has required Repco staff to spend a considerable amount of time managing customer complaints and redressing concerns raised by the ACCC, including entering into a court enforceable undertaking.
Key features of Repco's undertaking to the ACCC include:
- an undertaking that Repco will maintain and continue to implement a trade practices compliance program for three years and review that program and report to the ACCC every 18 months
- an undertaking to place a public disclosure notice in store acknowledging insufficient stock was held by it during the sale and apologising for any inconvenience to persons who responded to Repco's advertisements who were unable to purchase the advertised stock
- an undertaking to publish an article in the Australian Automotive Aftermarket Association Magazine focussing on the lessons learned by Repco as a result of the concerns raised by the ACCC, and
- an undertaking to provide alternative stock or a $100 Repco Gift Voucher to those consumers who made written complaints to either the ACCC or to Repco and who have not otherwise received compensation from Repco.
"The matter was a clear reminder to companies of the need to ensure sufficient stocks are available before committing to advertise a sale item", Mr Samuel. "Where stock is available in limited quantities and/or locations it would be prudent to clearly communicate this. Doing otherwise creates a risk of contravening the bait advertising provisions contained in section 56 of the Trade Practices Act 1974".
"It is important to get things right before an advertisement goes to print and in the event that something goes wrong, to have in place procedures to either satisfy demand through a 'rain-check' or the provision of equivalent goods at the same price as those advertised. Prevention is to be preferred to cure".
Copies of the undertaking will be available from the ACCC's website, under Public Registers.(see links below)
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