We reported earlier on the decision of a single judge of the Federal Court in ACCC v Ascot Four Pty Ltd.2
Justice Mansfield found that Ascot Four Pty Ltd (Ascot Four) falsely represented to a significant section of ordinary and reasonable consumers that, by purchasing certain jewellery items during the sale period, customers would save the difference between the ‘sale price’ and ‘the strike-through price’.
The evidence presented at the trial showed that, although Ascot Four did offer each of the jewellery items in question for sale at the ‘strike-through’ price before the sale period, it, in fact, never sold these jewellery items at the offered price due to the discount culture prevalent in the jewellery retail market. Consequently by purchasing the jewellery at the sale price, consumers were not making the savings advertised by Ascot Four (the difference between the sale price and the strike-through price).
Ascot Four appealed this decision to the Full Federal Court, asserting, among other grounds, that the primary judge should have found that both the ‘strike-through price’ and the ‘sale price’ represented an offer price only and not the price at which the items were to be eventually sold.
Ascot Four argued that customers, aware of the discount culture, would have used the ‘strike-through’ price as a starting point for the negotiations.
The Full Federal Court consisting of Chief Justice Black and Justices Ryan and Jagot unanimously dismissed Ascot Four’s appeal.
In brief, their Honours agreed with the findings of Justice Mansfield and ruled as follows:
- Ascot Four’s jewellery items were offered for sale at the ‘strike-through’ prices before the sale period.
- Ascot Four jewellery items were never sold at the ‘strike-through’ prices before the sale period.
- The sale catalogue conveyed a representation that purchasers of the relevant jewellery items would make a saving of the difference between the ‘sale price’ and the ‘strike-through’ price if they purchased the jewellery during the sale time.
- These representations were false because no consumer ever paid the ‘strike-through’ price before the sale period. Further, their Honours commented that the purchasers aware of the discount culture of the jewellery market would have known that they could negotiate a price lower than the ticketed or offer price both before and during a sale. However, a significant section of ordinary and reasonable consumers would not have been aware of this and, therefore, would have had a false belief that, by buying jewellery items during the sale period, they were making a saving.
What does this all mean for you?
The law in the area of dual-pricing is strict and can be summarised by the following well-known quote: truth, whole truth, nothing but the truth, so help me God!
Even if the items were offered for sale at the advertised price but were not actually sold at that price before the discount period, this is a contravention of the Trade Practices Act 1974 (Cth), and the ACCC is watching
Commenting on this case, ACCC Chairman Mr Graeme Samuel said: ‘The Full Federal Court’s judgment reinforces the ACCC’s message to retailers who use two price advertising that the represented savings must be legitimate. The ACCC seeks truth in advertising and consumers have every right to expect it’.3