18 February 2013 Down, down, prices are down ... or are they?


In Brief

Retailers must not mislead customers about the amount of money they are saving during advertised sale periods.

ACCC v Jewellery Group Pty Limited (No 2) [2013] FCA 14

Last month, the Federal Court found that Zamel's Jewellers engaged in misleading or deceptive conduct and made false or misleading representations by distributing numerous catalogues promoting the sale of jewellery using dual-pricing.

By using strikethrough and was/now pricing techniques, Zamel's represented to customers that customers would save the difference between the compared prices if those customers purchased the items during the sale being advertised in the relevant catalogue. This representation was misleading because Zamel's did not in fact sell or rarely sold the items in question at the higher price in the period immediately before the relevant catalogue sale period.

Court ordered that Zamel’s pay pecuniary penalties of $250,000 in respect of the contraventions of the Trade Practice Act (as it then was) and the ACCC's costs.

In addition to the significant pecuniary penalties, the court ordered that Zamel’s publish corrective advertising, implement a compliance program, conduct a risk assessment to assess the likelihood of the contraventions reoccurring, establish, maintain and administer a trade practices complaints handling system, implement staff training and conduct an external review of the business' compliance.

Where to from here?

Strikethrough and was/now pricing is not novel or new for the retail sector. However, what has shifted is the duration of sales periods. The traditional bi-annual sales periods following Christmas and mid-year have been replaced with constant sales campaigns throughout the year. A walk down the main street of any capital city throughout the country reveals that a majority of retail stores are advertising some type of discount.

Clients tell us that the result of this shift is that consumers are no longer prepared to pay full price for quality items. Retailers must adapt and be creative. If they need to sell goods for a reduced price for prolonged periods they need to ensure that their marketing campaigns do not fall foul of the law by creating a misleading impression.

For more information or support with ensuring that your business's print or online marketing campaigns do breach the law or for assistance with the implementation of a trade practice compliance program for your business, contact Swaab Attorneys.

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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