Ascot Four Pty Ltd, the previous owner of the jewellery retailer Zamel's*, has been convicted in the Federal Court, Adelaide, of making false and misleading representations about the price of goods.
Following an investigation into Zamel's Christmas 2005 catalogue by the Australian Competition and Consumer Commission, the Commonwealth Director of Public Prosecutions, laid charges against the jewellery retailer on 20 December 2006.
Zamel's distributed 2.6 million Christmas catalogues in South Australia, the ACT, Victoria, Western Australia and Tasmania. The charges were in respect of 11 jewellery items in the catalogue. Each of the 11 items featured a sale price next to a strike through price. For example, a 10.5mm bolt ring bracelet at a price of $745 was pictured with a strike through price of $1,675.
The court found that Ascot Four engaged in conduct in breach of section 75AZC(1)(g) of the Trade Practices Act 1974, which prohibits false or misleading representations being made in relation to the price of goods, by falsely representing that it had sold each of the 11 items at the strike through price within a reasonable time prior to the sale period.
Further, Ascot Four was found to have falsely represented that purchase of each of the 11 items during the sale period would result in a saving to the consumer of the difference between the sale price and the strike through price.
Justice Mansfield of the Federal Court specifically noted that: "having regard to the previous sales of each of the 11 jewellery items, the purchase of any of those 11 items during the sale period would not result in a saving to the purchaser of the difference between the sale price and the strike through price. In no case had the defendant sold any of those items…at anywhere near the strike through price."
ACCC Chairman, Mr Graeme Samuel, said comparison price advertising is a common practice in a number of industries.
"This conviction shows that advertised discounts must be real and not illusory. If you make a was/now price comparison or use a strike through price, you must have genuinely offered the product at the 'was' or strike through price for a reasonable period immediately before the sale promotion."
A further hearing will occur on a date to be fixed for the purpose of considering what, if any, further orders should be made.