All that glitters is not gold

Published On 27/01/2013 | By Hannah Foster | Consumer protection

In November last year, In Competition published a blog on the ACCC’s misleading and deceptive conduct case against jewellery chain Zamel’s for “was/now” pricing claims. The ACCC brought a case against the retailer under sections 52 and 53(e) of the former Trade Practices Act (TPA) (now sections 18 and 29(i) of the Australian Consumer Law).

The ACCC was concerned about Zamel’s ‘Was/Now’ or ‘strikethrough’ pricing, where, for example, prices in catalogues and on in-store tickets read ‘Was $99, Now $45’. In 2008, 2009 and 2010, several different sale catalogues with these kinds of claims were distributed nationally to about 3 million recipients (per catalogue). Large numbers of catalogues and fliers were also made available in-store and published online. The Federal Court found that the representation conveyed by such advertising was that the customer would have paid the ‘Was’ price prior to the sale period. This was not, in fact, the case, with goods never or rarely being sold at the higher ‘Was’ price prior to the sale period. Zamel’s was therefore found to have contravened section 52 and 53(e) of the TPA.

On 18 January 2013, Justice Lander of the Federal Court handed down orders with respect to the penalty to be imposed on Zamel’s. Justice Lander imposed a total pecuniary penalty of $250,000. The ACCC had sought pecuniary penalties of $600,000 in addition to declarations, corrective advertising, an order to implement a compliance program and costs. At the completion of the hearing, Zamel’s agreed with the substance of the proposed orders but submitted that penalties should not exceed $50,000.

Quantifying penalty

Justice Lander noted that, in a case like this, it was not appropriate to reach a pecuniary penalty figure ‘by an itemisation of the number of units and the number of times’ the conduct occurred, but rather ‘by imposing a single pecuniary penalty in respect of the contravening conduct’. Justice Lander discussed a number of the factors to be considered in reaching a penalty figure. These included Zamel’s size and market share,  the scale of the contraventions, the period over which the contraventions occurred, the deliberateness of the conduct, the level at which the conduct occurred within Zamel’s personnel and the fact that Zamel’s had received legal advice on this issue previously.

Corrective advertising

In addition to the $250,000 penalty, Justice Lander made declarations and ordered Zamel’s to implement a trade practices compliance program and pay the ACCC’s costs. Justice Lander also ordered Zamel’s to publish corrective notices in newspapers nation-wide and on the Zamel’s website. Justice Lander’s three stated reasons for making corrective advertising orders were to:

  • protect the public interest by dispelling false impressions caused by the earlier advertising;
  • alert consumers to the fact that Zamel’s had engaged in misleading and deceptive conduct; and
  • provide deterrence to Zamel’s to ensure there would be no repetition of the conduct.

On 21 January 2013, the ACCC also published a news release on this case. Despite the pecuniary penalty being lower than that which was requested by the ACCC, the ACCC’s Chairman, Rod Sims, commented that the penalty imposed served as a ‘stern warning to other retailers.’

Photo credit: National Photo Company / / Public Domain Mark 1.0

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