Allans Music Group Pty Ltd, which claims to be Australia’s largest musical instrument retail group, was fined a total of $80,000 in the Federal Court, Adelaide, today.
The fines follow a guilty plea by Allans to nine counts of making false or misleading representations concerning price. Nine other counts were withdrawn. Allans made the false “WAS – NOW” price claims in its Christmas 2000 catalogue.
Justice Tamberlin convicted Allans and imposed fines of $80,000 cumulatively across the nine counts. He found that Allans advertising was "false in the sense that for all practical purposes, the items in question had not been sold in the pre-Christmas period at the 'WAS' price but rather at prices substantially below the claimed 'WAS' price".
ACCC Chairman, Professor Allan Fels, said: "This is the first time a retailer has been convicted by the Federal Court for the use of false 'WAS – NOW' advertising. The case is important to anyone who advertises goods or services for sale by reference to a claimed saving or discount. The ACCC regarded the conduct as particularly blatant and reckless and therefore pursued it as a criminal prosecution.
"Christmas brings a peak in sales and retailers compete vigorously for the consumer's dollar. This makes it all the more important for advertising to be honest and accurate. At the same time, consumers should shop around and compare prices even more carefully than they would at other times of the year".
In convicting Allans, Justice Tamberlin said that the catalogue "was plainly designed to attract custom on a false basis during a key marketing period. The attraction of custom of course cannot be criticised, but the resort to misleading conduct is reprehensible, as acknowledged by the guilty pleas …".
Professor Fels said: "The court has made it clear that when a business tells consumers they will receive price savings, those consumers will expect that the price offered is less than the price they would have paid at that same business before the promotion began. If the claimed saving is not genuine the business runs a serious risk of breaching the Trade Practices Act".
Justice Tamberlin said: "In particular, I do not accept that a customer would understand the pricing policies of the suppliers in the market as referring to reductions from a prior recommended price as opposed to a prior actual price".
In mitigation of its conduct, Allans offered to contact the consumers who purchased the nine items and offer them a $50 gift voucher or, if they cannot be contacted, to donate $50 to charity.
Justice Tamberlin noted this offer but also noted that "the extent to which Allans departed from the true position as to earlier pricing is significantly in excess of $50 and in some cases amounts to a difference in respect of $1000 in respect of an individual item".