"The Australian Competition and Consumer Commission has settled its legal proceedings against Video Ezy Australasia Pty Ltd, related companies and various senior Video Ezy management", ACCC Chairman, Professor Allan Fels, said today.
The ACCC commenced legal action in May 2000 alleging that from December 1999 Video Ezy, in 21 of its 33 corporately owned stores, supplied certain new release videos at $7.00. The price of $7.00 was an increase of $1.00 above the price charged in those stores prior to the increase. The ACCC alleged that the increased prices were charged unlawfully in anticipation of the introduction of the Goods and Services Tax.
The ACCC also alleged that Video Ezy, through its staff at its corporate stores in Townsville, made representations to customers that were likely to mislead customers into believing the price increases were due to the GST and that Video Ezy was entitled or obliged to collect GST prior to July 2000.
In settling the matter Video Ezy has consented to Federal Court orders in which it:
- is declared that it had made false and misleading representations in breach of the Trade Practices Act by advising some customers at its Townsville, Queensland stores that the price increases of the new release videos were due to the inclusion of the GST when this was not the case is restrained from making similar representations in the future
- will, for a period of 6 months, reduce the overnight hire price of all new release videos at the Townsville Stores to a price not exceeding $6.45 (inclusive of GST)
- will send letters to Townsville members apologising for and correcting any misrepresentations and advising of the price decrease in the Townsville Stores
- will display an in-store notice in each of the Townsville Stores apologising for and correcting any misrepresentations and advising of the price decrease in the Townsville Stores
- will compensate, by the provision of one free overnight first release video, any hirer of a $7.00 overnight first release video at any of the Townsville Stores during the period from 1 September 1999 to 31 January 2000 who provides satisfactory confirmation to Video Ezy that he/she was confused or concerned by a statement from a Video Ezy employee linking increases in the hire prices for such videos in any way to the GST. Video Ezy will make this offer known to members of the relevant store by in-store notices
- will further develop its trade practices compliance and education program in relation to relevant provisions of the Act. The program will be improved to lessen the likelihood of any future breaches of the Act by Video Ezy
- will contribute to the ACCC's costs in the matter
Video Ezy has accepted the possibility that its staff may have made the misrepresentations alleged and as such has apologised to its customers who may have been misled about its right to collect the GST prior to 1 July 2000.
The ACCC has agreed to discontinue its price exploitation claims. In settling the matter Video Ezy has maintained its position that its conduct did not amount to a contravention of the price exploitation provisions of the Act. The ACCC believes that it was reasonable for it to have pursued its concerns about the possibility of price exploitation.
"The ACCC believes the settlement provides significant redress to affected consumers", Professor Fels said. "The ACCC had always believed that the potential for consumers to be exploited in the transition to the New Tax System was at its greatest when consumers were confused or misled about price changes.
"The settlement in which Video Ezy has corrected any misrepresentation and in which compensation is offered to those who may have been misled resolves the majority of the ACCC's concerns".