The fashion house, Cue, has been fined $75,000 for attaching misleading price tags to its garments. The offences occurred in the lead-up to Christmas in 1994.
Two companies in the Cue group were convicted in the Federal Court today on 30 charges of having made false and misleading representations about the price of their garments. The companies, Cue Design Pty. Ltd. and Cue & Co. Pty. Ltd, were fined for breaches of section 53(e) of the Trade Practices Act, one of the consumer protection provisions of the law. The companies pleaded guilty to the charges.
The Cue group designs and manufactures fashion garments for young women. It has a retail chain comprising 80 stores located across Australia. The charges involved Cue stores in Adelaide, Perth, Melbourne, Brisbane, Canberra and Hobart.
The Australian Competition and Consumer Commission initiated the action against the fashion house, alleging that in the week before Christmas Cue released nationally a new range of shorts, skirts, vests and tops from its warehouse in Sydney. Swing tags attached to each garment showed two prices; the higher price was crossed out and prices ranging between $13 and $56 less were written underneath.
The ACCC alleged this would lead shoppers to believe that the garments had previously been sold at the higher prices and had now been discounted. In fact, the garments had never been sold before.
In fixing penalty Justice O'Loughlin said Cue's sales strategy was widespread and not an isolated event. He said the conduct, "preyed on the gullibility of the public [and] the natural and probable consequence of a dual-priced swing tag is that members of the buying public would assume that the garment had previously been offered for sale at the higher of the two prices and was now available at the lower price."
The judge also defended the former Trade Practices Commission's use of a media release to announce that the court action had been initiated. He said the Commission's statement was "accurate" and its conduct "reasonable".
"The attendant publicity was a consequence of the defendants' conduct. I do not intend to reduce penalties because of the consequences of such publicity."
Professor Allan Fels, chairman of the ACCC, said today, "Two-price advertising can be a powerful competitive tool for retailers and a valuable source of market information for consumers. It is not illegal in itself. If a price comparison is accurate, not misleading, and can be substantiated, there is no problem. However, where the price comparison is not accurate, or is misleading, consumers are unable to make informed choices about the products they buy."
"Businesses who use inaccurate or misleading price comparisons may also gain an unfair competitive advantage over those who do not. Like Cue, they run the risk of being convicted for breaches of the Trade Practices Act."
The two Cue companies were ordered to pay the legal costs of the ACCC as well.
The ACCC has published a guidebook for businesses on the topic of two-price advertising. It is available free from all ACCC offices.
Two companies in the Cue group were convicted in the Federal Court today on 30 charges of having made false and misleading representations about the price of their garments. The companies, Cue Design Pty. Ltd. and Cue & Co. Pty. Ltd, were fined for breaches of section 53(e) of the Trade Practices Act, one of the consumer protection provisions of the law. The companies pleaded guilty to the charges.
The Cue group designs and manufactures fashion garments for young women. It has a retail chain comprising 80 stores located across Australia. The charges involved Cue stores in Adelaide, Perth, Melbourne, Brisbane, Canberra and Hobart.
The Australian Competition and Consumer Commission initiated the action against the fashion house, alleging that in the week before Christmas Cue released nationally a new range of shorts, skirts, vests and tops from its warehouse in Sydney. Swing tags attached to each garment showed two prices; the higher price was crossed out and prices ranging between $13 and $56 less were written underneath.
The ACCC alleged this would lead shoppers to believe that the garments had previously been sold at the higher prices and had now been discounted. In fact, the garments had never been sold before.
In fixing penalty Justice O'Loughlin said Cue's sales strategy was widespread and not an isolated event. He said the conduct, "preyed on the gullibility of the public [and] the natural and probable consequence of a dual-priced swing tag is that members of the buying public would assume that the garment had previously been offered for sale at the higher of the two prices and was now available at the lower price."
The judge also defended the former Trade Practices Commission's use of a media release to announce that the court action had been initiated. He said the Commission's statement was "accurate" and its conduct "reasonable".
"The attendant publicity was a consequence of the defendants' conduct. I do not intend to reduce penalties because of the consequences of such publicity."
Professor Allan Fels, chairman of the ACCC, said today, "Two-price advertising can be a powerful competitive tool for retailers and a valuable source of market information for consumers. It is not illegal in itself. If a price comparison is accurate, not misleading, and can be substantiated, there is no problem. However, where the price comparison is not accurate, or is misleading, consumers are unable to make informed choices about the products they buy."
"Businesses who use inaccurate or misleading price comparisons may also gain an unfair competitive advantage over those who do not. Like Cue, they run the risk of being convicted for breaches of the Trade Practices Act."
The two Cue companies were ordered to pay the legal costs of the ACCC as well.
The ACCC has published a guidebook for businesses on the topic of two-price advertising. It is available free from all ACCC offices.