31 May 2008

In brief

Energizer v Remington - comparative advertising that keeps going and going

In December 2007 Remington was found to have engaged in misleading and deceptive conduct. The court found that Remington’s comparative advertising campaign was misleading by inaccurately comparing the “Varta High Energy” line of Remington batteries with the performance of Energizer batteries.

The comparative advertising featured a yellow sticker on the front of Remington’s Varta High Energy batteries that stated “Lasts As Long As Energizer® and Duracell®”. Studies on the batteries found that Energizer Lithium batteries and Energizer Advanced batteries outlasted the Varta High Energy batteries and Energizer Max batteries outlasted Varta High Energy batteries in some, but not all, of the tests.

In arriving at his decision, Justice Moore acknowledged Remington’s qualifying statement on the back of the packet, but found that it was not prominent enough to bring it to the attention of a consumer.

Remington was ordered by the court to cease supplying or distributing the Varta High Energy batteries in their current packaging. Remington was also ordered to remove all current promotional material from retail stores which featured the words “Lasts as long as Energizer and Duracell” by December 2007.

Supplementary orders were more recently made in March 2008 as a result of Remington’s failure to comply with the original orders by removing existing stocks of promotional material from retail stores. Remington was ordered to either remove from public display all current Varta Energy batteries in current packing from retail stores or to “oversticker” all packing that featured the misleading words by 11 April 2008.

Petrol commissioner

Patrick Walker has been appointed as the ACCC’s Petrol Commissioner. Mr Walker was previously Consumer Affairs and Prices Commissioner of Western Australia for a period of 10 years and established the State’s FuelWatch initiative.

Mr Walker has extensive government experience including heading local governments as the CEO of the City of Subiaco and the Town of Narrogin from 1986 to 1998. Mr Walker has also served on the Medical Board of Western Australia, the Legal Aid Commission and the National Travel Compensation Fund.

It is anticipated that Mr Walker will renew the ACCC’s focus on rising LPG and diesel prices.

Price-fixing extradition decision in the UK

On 12 March 2008, the United Kingdom’s highest court, the House of Lords, denied the United States an extradition order for an English citizen, Ian Norris to face allegations of price fixing in Pennsylvania. Had the US won the case, Mr Norris would have been the first UK citizen to face extradition to the United States on antitrust charges.

Two subsidiaries of the company that Mr Norris worked for in the US were required to pay substantial fines. In 2004 a Pennsylvanian grand jury returned an indictment and sought to extradite Mr Norris in relation to alleged illegal agreements that were said to have been made outside the US but were given effect in the US.

The House of Lords did not agree with the earlier decision and denied the US the extradition order. The House of Lords found that there was no “dual criminality” as Mr Norris would not have been guilty under English law. At the time Mr Norris was accused of the conduct in the US, price fixing did not attract criminal liability in the UK.

This decision could hamper future requests by the US to extradite UK citizens to face antitrust charges in the US.

ACCC’s appeal on “Was/Now” advertising

The ACCC is appealing the Federal Court’s decision in ACCC v Prouds Jewellers Pty Ltd relating to Prouds’ “Was/Now” advertising in Mother’s Day and Valentine’s Day catalogues.

During Mothers Day and Valentines Day in 2006, Prouds catalogues included advertising such as “Was $199/Now $99.50”. The court found that the 17 items that appeared in these catalogues had not actually ever been offered at the ‘Was’ price in that period and the advertising for these products in both of the catalogues was misleading.

Whilst the ACCC was successful in demonstrating that the Prouds catalogues were misleading through their use of the “Was/Now” prices, the ACCC did not succeed in showing that Prouds had mislead customers regarding the level of savings a customer could achieve from the sale. Prouds argued that the customer would have understood that the “Was” price was the price at which the item had been offered for sale and the item had not necessarily been sold at that price. The ACCC contended that the “Was” price was the price at which the item had actually been sold to consumers. Justice Moore considered that the ACCC’s case in this area failed as consumers would not believe that the item was sold at the “Was” price as discounting and bargaining is a common feature of jewellery sales. It is on this point that the ACCC will appeal.

Laura Ashley snagged on two-price strategy

Clothing retailer Laura Ashley (Australia) Pty Ltd has provided the ACCC with undertakings after the ACCC’s investigations into its two-price advertising strategy.

Laura Ashley’s strategy involved launching a new product line with a “regular price” at selected stores for a limited time. Laura Ashley subsequent supplied the product to Australia-wide stores and relied on this regular price as the starting point for all sales and discounts. The regular price was displayed on products even though the product may not have been sold at that price anywhere in Australia within the previous 12 months.

The undertakings provide that Laura Ashley will:

  • refrain from offering items for sale bearing two price labels where those items have not been offered for sale at that price reasonably recently and for a reasonable period of time
  • refrain from offering items at a percentage off a higher marked price when the items have not been offered for sale for that marked price immediately prior to the percentage off sale
  • display a notice at the point of sale in each of its stores alerting customers to concerns raised by its two price advertising practices
  • publish a notice in the industry magazine regarding the pricing practice, and
  • implement a trade practices law compliance program.

Sarah Court- the new ACCC Commissioner

Sarah Court has been appointed as the ACCC’s newest commissioner, replacing David Smith.

Ms Court has worked with the Australian Government Solicitor (AGS) since 1996. She became the Director of the AGS Adelaide-Darwin office in 1999 and the Director of the AGS National Tax Practice in 2007. Ms Court has also been the Client Service Manager for the ACCC since 2004.

ACCC signs MOU with Consumer Affairs Victoria

The ACCC recently signed a Memorandum of Understanding (MOU) with Consumer Affairs Victoria. Mr Samuel, ACCC Chairman, stated that the MOU “reflects the spirit of collaboration between the two agencies and demonstrates the commitment of both organisations to work together to ensure consumers and traders are aware of their rights and responsibilities under fair trading and consumer protection laws and any breaches of the law will be vigorously pursued.”

ACCC Consumer and Business Directory

The ACCC has launched a new online resource, the Consumer and Business Directory (CBD), that assists consumers and businesses by facilitating an easy search for the contact details of over 1600 private, community and government organisations that offer consumer and business complaint-handling services. A business can use the CBD to access services or add its contact details to CBD’s database via the ACCC website.

Sunglasses blitz

Four major retailers of sunglasses, Fossil Retail Stores (Australia) Pty Ltd, Paris Miki Australia Pty Limited, J.L. Footwear Pty Ltd (licensee of the Nine West store brand) and Chelsey Girl Pty Ltd have provided the ACCC with undertakings following a sunglasses blitz by the ACCC. The ACCC’s investigations focused on major sunglasses retailers’ compliance with product safety standards. In November 2007 the ACCC surveyed 500 stores in two metropolitan shopping centres and discovered only 21 stores supplying sunglasses were fully compliant with the Australian product safety standard. The undertakings state that the retailers will:

  • ensure goods subject to a mandatory safety and information standard will comply with that standard
  • ensure display and sales stock are appropriately labelled, and
  • implement a trade practices compliance program.