The Full Federal Court has upheld the decision of Justice Lander that The Jewellery Group (Zamel’s) made false or misleading representations in contravention of the Trade Practices Act by its use of two price advertising in catalogues and an advertising flyer.
After being found guilty in August 2012 of misleading consumers about the level of savings to be made on 44 items during an extensive sales period, Justice Lander imposed a penalty of $250,000 on Zamel’s in January 2013.
He ordered Zamel’s to publish corrective notices, implement a trade practices compliance program and pay the Australian Competition and Consumer Commission’s (ACCC) costs of the proceedings.
Zamel’s appealed the decision on the basis that the trial judge erred in finding that the information conveyed in the catalogues and flyer were savings representations and were likely to be false or misleading. The appeal was dismissed on Friday 29 November and Zamel’s was ordered to pay the respondent’s costs of the appeal.
As reported previously by Jeweller, the Federal Court originally found that Zamel’s had misrepresented the savings consumers would make from purchasing jewellery items.
At the time that the ACCC brought the action against Zamel’s, there were between 93 and 101 stores, and the 44 jewellery items in question, which included lockets and pendants, were included in one or more Zamel’s catalogues and one advertising brochure distributed nationally, instore and on its website between November 2008 and May 2010.
Justice Katzmann of the Full Federal Court noted, “The representations were plainly intended to make the reader think that he or she would receive not just a discount, but a particular discount in the price of the marked goods. The clear invitation was for the consumer to subtract the ‘now’ price from the ‘was’ price or the ‘sale’ price from the ‘strikethrough’ price as the case may be.”
ACCC chairman Rod Sims said, “The ACCC welcomes this decision as it provides further guidance on the application of the law in the context of two price advertising.
"The Full Federal Court has confirmed that Zamel’s, a significant player in jewellery retailing, took advantage of consumers and misled them about the level of savings they would achieve by purchasing items during catalogue sales.”
When the original penalty was announced in January, Sims told Jeweller that the Zamel’s case was important because the promotion it ran was systematic and widespread.
“Zamel’s distributed 3.4 million catalogues to homes, they published other catalogues and flyers and it occurred between 2008 and 2010, so it was widespread and went on for some time.
“And, of course, Zamel’s is a large company with around 100 stores, so we were concerned that it was quite detrimental to consumers and they might be enticed to buy something they might otherwise wouldn’t have bought without shopping around because they thought they were getting such a good deal,” Sims said.
At the time of the offences (2008-2010), Zamel’s was owned by The Jewellery Group as part of the private equity firm Quadrant, however; the national jewellery chain was subsequently sold in November 2011 to M Suresh Group, a Mumbai-based jewellery manufacturer.
It's unclear whether the latest decision affects M Suresh, which claims to be one of the world’s leading manufacturers, importer and exporter of cut and polished diamonds, given that the offences occurred before it acquired Zamel's. However it's believed that the purchase involved acquiring the shares in the company (The Jewellery Group) and if correct, M Suresh would have funded the appeal.
Second time aroundIt’s not the first time Zamel’s has been caught misleading the public with false advertising, although the previous judgement was brought against the original owners, the Zamel family, before the retail group was sold the first time to The Jewellery Group/Quadrant.
An investigation by the ACCC led to the Commonwealth Director of Public Prosecutions laying charges against Zamel’s in December 2006 and the business was eventually fined $380,000 in 2009.
At that time, the Federal Court in Adelaide found Zamel’s (Ascot Four Pty Ltd) had falsely represented that the purchase of each of the 11 items during a sale period would have resulted in a saving of the difference between the sale price and the strike through price. This was in breach of section 75AZC(1)(g) of the Trade Practices Act 1974, which prohibits false or misleading representations being made in relation to the price of goods.
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