JB Hi-Fi investigated by ACCC over comparative advertising

By James Wells

MELBOURNE: Narta member JB Hi-Fi has offered court-enforceable undertakings to the Australian Consumer and Competition Commission (ACCC) after an investigation into the company’s comparative advertising used in a catalogue to consumers.

The ACCC raised concerns about aspects of the comparative advertising featured in a catalogue distributed in February and March of this year.

According to ACCC chairman, Graeme Samuel, there are a number of types of comparative or two-price advertising which include the company’s own or previous normal price, a competitor’s price or a recommended retail price.

"The catalogue included 45 home entertainment products advertised at a discount represented as a saving of a nominated sum off each product’s recommended retail price,” Samuel said.

"The products included televisions, DVD/VCR combos, DVD recorders, receivers, home theatre systems, speakers and video cameras.

"The ACCC felt consumers may have believed that JB Hi-Fi, or its relevant market competitors had, within a reasonable time before the catalogue’s issue, sold the products in reasonable quantities at the recommended retail price. This may not in fact have been the case. If so, the ACCC was concerned that the catalogue may have contained false or misleading representations in breach of the consumer protection provisions of the Trade Practices Act 1974.
 
"JB Hi-Fi believes it was entitled to make the representations but has acknowledged the ACCC’s concerns.
JB Hi-Fi has agreed that it will not advertise any product with a discount off its recommended retail price unless the product was advertised and sold at that price in the same markets, in reasonable quantities for a reasonable period of time and within a reasonable period of the date of the advertising.

JB Hi-Fi has also agreed it will establish and implement a trade practices law compliance program on the relevant consumer protection provisions of the Act.

Samuel acknowledged JB Hi-Fi’s cooperation in resolving the matter, but warned the retailer and its competitors that this type of advertising will be closely monitored in the future.

"Price is a critical factor in influencing a consumer’s decision to buy a product. Retailers using comparative advertising must ensure the savings claimed are real. This is a powerful marketing tool that must be used truthfully and accurately. Retailers should be careful not to drop their guard in the flurry of sales leading up to and following Christmas. The ACCC will certainly not drop its guard on the issue," Samuel said.

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