The Australian Competition and Consumer Commission has settled its Federal Court litigation with Kmart Australia Ltd.
The litigation involved allegations that in 1997/98 the Firle, Adelaide Kmart store, and other Kmart stores throughout Australia, had falsely represented the savings possible on a Black & Decker 2-cup espresso machine.
The claims were on labels attached to the shelf where the product was displayed. There were a series of price reductions on the product over many months. In each instance the shelf label claimed savings based on comparing the current selling price to when the product was initially reduced, not the immediate past selling price. The ACCC alleged this breached the two-price advertising and misleading and deceptive conduct provisions of the Trade Practices Act 1974.
Kmart has understood the ACCC's concerns and worked constructively to resolve this proceeding. The settlement reached involves consent orders by the Federal Court which include:
- Kmart placing corrective advertisements in daily newspapers throughout Australia;
- Kmart compensating consumers who claim they were misled by the representations; and
- an agreed contribution by Kmart to the costs of the ACCC's proceedings.
Kmart has given an undertaking to the Court that it will not, for a period of three years, represent that purchasers would save a specified amount by a price reduction where the saving is not calculated by referring to a price which applied for a reasonable period before the cut.
A court-enforceable undertaking has been provided by Kmart that it will review its current trade practices compliance program and introduce changes to implement a program compliant with the Australian Standard for Compliance Programs AS - 3806. An independent audit will follow Kmart's initial internal review. This will underpin Kmart's confidence that the program complies with the standard.
The ACCC acknowledges the cooperation of Kmart, a member of the Coles Myer Group, in reaching a productive outcome. The ACCC also acknowledges that there is a genuine commitment towards trade practices compliance in the Coles Myer Group.
The trade practices compliance program agreed to be carried out by Kmart was endorsed today by Mr Dennis Eck, the Chief Executive Officer of Coles Myer Ltd.
'The compliance program agreed upon in the settlement of the dispute between Kmart and the ACCC will form an important part of an on-going review of our compliance systems and is supported', Mr Eck said.
For further information about this media release: Professor Allan Fels, Chairman, pager (016) 373 536 Ms Lin Enright, Director, Public Relations (02) 6243 1108 (w)