The Australian Competition and Consumer Commission has accepted court-enforceable undertakings from Kerandis Proprietary Limited, trading as Urban Rhythm Furniture, in respect of two-price advertising.
Urban Rhythm Furniture operates three furniture retail outlets in Melbourne located in Richmond, Dandenong and Cheltenham. Urban Rhythm Furniture purchases the bulk of its products from local wholesale distributors and imports the rest directly from overseas.
In December 2007, Urban Rhythm Furniture ran an in-store Christmas promotion, pricing furniture by reference to a two price structure (e.g. $2,240 $1795). The majority of the furniture items were discounted from a previous selling price.
A limited number of directly imported items, never previously sold by Urban Rhythm Furniture, were discounted from an estimated price, based on the likely retail price Urban Rhythm Furniture believed it would have charged consumers for those items had those items been purchased by it from a local wholesale distributor. The ACCC was concerned that the use of the same two-price representations for those limited items was misleading to consumers and unfair to other traders because the discount was based on an estimated rather than an actual historical selling price and this had not been conveyed to consumers.
Urban Rhythm Furniture has acknowledged that its conduct is likely to have contravened sections 52 and 53(e) of the Trade Practices Act 1974.
As part of the undertaking offered by Urban Rhythm Furniture to the ACCC under section 87B of the Act, it has undertaken to:
- refrain from offering goods at a discount using two-price representations where those good have not been previously offered for sale by the company at the higher price for a reasonable period of time immediately prior to the period of the commencement of the discount
- ensure that all future advertising and other forms of promotion comply with part V of the Trade Practices Act, and
- establish and implement a trade practices law compliance program.
"Price savings can significantly influence a consumer's purchasing decision. Consumers are entitled to expect that retailers are accurately representing savings in their advertising," ACCC Chairman, Mr Graeme Samuel, said today.
"A business may compare its current prices with its own previous prices as long as the represented savings are genuine and the goods were offered to consumers at the previous prices for a reasonable period of time immediately prior to the commencement of the discount."
A copy of the undertaking will be available on the ACCC's website.