Commerce Commission warns Progressive Enterprises over misleading sales claims
23 March 2012
The Commerce Commission has issued a warning to the supermarket company Progressive Enterprises Limited about beer sale promotions that the Commission alleges breached the Fair Trading Act.
In widespread advertising in late 2010 and early 2011, Progressive Enterprises claimed customers could save "at least 20%"or "at least 25%" off all beer at its Countdown, Foodtown and Woolworths supermarkets.
The Commission believes that consumers would reasonably have expected the 20% to 25% off claim to mean either:
- that they would save 20% to 25% off the price at which the beer was offered for sale immediately prior to the promotion OR
- that they would save 20% to 25% off the usual price of the beer.
However the Commission's investigation found that in a number of cases, the discount was calculated off neither of these prices. Progressive confirmed that the discounts were calculated off Progressive's "standard shelf price" for the products.
The Commission found that in a number of cases, it had been a lengthy period of time since the beer had been offered at the standard shelf price. For example a 12 pack of NZ Pure was advertised as "20 % off" but had not been sold at the standard shelf price or close to it for the previous eight months.
In another example, a 15 bottle pack of Steinlager Classic beer was advertised with "at least 20% off". In some of the Progressive Enterprises supermarkets it had been more than six months since that product had been sold at the $31.68 standard shelf price.
"We believe that this practice breaches the Fair Trading Act. The Commission considers it misleading to use a standard shelf price as the basis for a saving claim when that price has not been displayed or charged for lengthy periods of time," said Commerce Commission General Manager of Competition, Kate Morrison.
"We acknowledge that Progressive Enterprises has cooperated with our investigation and changed their advertising and promotional material when advised of the Commission's concerns. It also appears that this type of practice is fairly widespread in the retail sector. For these reasons we have decided to warn Progressive Enterprises on this occasion. We are now considering how we can best address sector-wide issues such as this with retailers," said Ms Morrison.
"When a retailer uses misleading techniques to lure customers in, or to make a sale, they not only dupe the consumers, but also harm their competitors who are acting honestly," said Ms Morrison.
The Commission has compliance resources including a DVD available on its website for retailers and their marketers who want to know how to avoid breaching the Fair Trading Act. Fair Trading Act resources can be found at http://www.comcom.govt.nz/fair-trading-downloads/
The Commission considers a recent case taken by the Australian Competition and Consumer Commission to be appropriate precedent for the views the Commission has reached in the Progressive Enterprises case.
In the ACCC v Prouds Jewellers Pty Ltd, the Federal Court of Australia decided that, in the context of a "was/now" price promotion, the "was" price is a reference to the price at which the product was most recently offered for sale. In that case, the Court found that the "was/now' claims were misleading as the goods had not been offered at the "was' price immediately prior to the sale.