Australian Opal Cutters Pty Ltd - s.87B undertaking

Australian Opal Cutters Pty Ltd (AOC) operates a business through which it sells a variety of jewellery and gemstones, predominantly opals and pearls.

On or around 7 December 2005, AOC received a letter from the ACCC in relation to AOC's advertising practices. In that letter, the ACCC sought AOC's comments in relation to AOC's advertising claim that AOC's opal products were "50-55% off normal retail prices". The ACCC also asked AOC to provide information regarding the basis on which this "normal retail price" was determined.

AOC provided a response to the ACCC and, in a letter dated 29 December 2005 (the ACCC Letter), the ACCC thanked AOC for its detailed response and advised AOC that:

... based on this information I am writing to advise that this office does not propose to take any further action in the matter.

AOC has, from at least the date of the ACCC Letter until approximately March 2009, continued to refer to a "normal retail price" in its advertising and marketing materials. AOC represented to consumers that the “normal retail price” for an item was the price that a consumer would pay for an item if the consumer purchased that item from one of AOC’s competitors. AOC represented to consumers that it conducted market research into the prices and products of its competitors and based the “normal retail price” on that research.  The ACCC formed the view that there was not a sufficient basis for accurately determining the “normal retail price”.  AOC admits that this conduct is likely to have contravened the prohibitions on misleading, deceptive and false conduct regarding the value and price of goods in sections 52, 53(a) and 53(e) of the Trade Practices Act 1974.

Between the approximate dates of September 2007 and February 2009, AOC exhibited the ACCC Letter, as part of a customer testimonials folder, on its sales desks at its Pitt Street premises. During this period, customers were free to peruse the customer testimonials folder.  The ACCC formed the view that this could have led consumers to believe, wrongly, that the ACCC approved of or endorsed AOC’s advertising practices.  AOC admits that this conduct is likely to have contravened the prohibitions on misleading, deceptive and false conduct regarding approval or endorsement in sections 52 and 53(c) of the Act.

AOC has offered to the ACCC an undertaking pursuant to section 87B of the Act that it will:

• not advise its customers that AOC has been "cleared", "previously cleared" or "checked out" by the ACCC; and
• no longer refer to "normal retail prices" in its advertising or in any invoices provided by AOC to its customers.
• implement a trade practices compliance program (Compliance Program) which will minimise the risk that AOC will contravene the Act in future;
• place a notice acknowledging the conduct on its websites and on its premises.