JAA warnings ignored before ACCC action

Posted March 16, 2010 |

Following an ACCC ruling last month against a Sydney jeweller, news has emerged that the jeweller ignored several JAA warnings.

The Australian Competition and Consumer Commission (ACCC) last month ordered Sydney jewellery retailer Australian Opal Cutters (AOC) to remove misleading advertising after the company repeatedly referred to "normal retail price" in its promotional material from December 2005 till March 2009.

"The ACCC believes the market research did not provide a sufficient basis upon which a 'normal retail price' could be accurately determined or quoted," ACCC acting chairman Peter Kell said in a statement at the time.

Now it has emerged that the JAA sent a number of letters warning AOC of possible breaches of the Trade Practices Act.

In response to complaints against the AOC from JAA members, several letters were sent by the JAA to AOC chairman Graeme Blaiklock. In 2007, and well before the ACCC became involved, JAA CEO, Ian Hadassin requested an explanation of AOC’s advertising practices, arguing that they breached the JAA's own Code of Conduct.

In August 2009, Blaiklock responded with a letter asserting that AOC was not a member of the JAA and was therefore not required to abide by its code.

Rather than address the issue of how the AOC had calculated the "normal retail price" quoted in its advertising, Blaiklock then accused the JAA of being "an association irritated by [AOC’s] success in the market and the level of competition [AOC] is providing to [JAA] members".

Blaiklock also said that this "attempt to reduce the competitiveness of the market" could place Hadassin, each member of the JAA board and the association "in breach of the Trade Practices Act".

In a written response sent a week later, Hadassin informed AOC that it was still a member of the JAA, having paid membership fees for 2006 and not having resigned. He then responded to Blaiklock's claims of anti-competition by stating that "the JAA encourages and supports discounting so long as the discounts offered are honest and real".

Hadassin then quoted Item 5 of the JAA Code of Conduct, which states that "claims and descriptions in advertisements by a JAA member will not be misleading and shall not be presented in such a way as to confuse or mislead the consumer".

Speaking with Jeweller following the ACCC ruling, Hadassin was determined to stress the need for jewellers to remain aware of their legal obligations: "The JAA has been buoyed by this decision and we will use the case as a precedent to more vigorously inform and educate and, if necessary, to pressure jewellers to comply with the law and the Code of Conduct."

Following last month’s ruling, ACCC acting chairman Peter Kell advised retailers who made price comparisons to ensure they had accurate, up-to-date figures that would withstand possible scrutiny.

"By comparing its prices with the so-called 'normal retail price', AOC was in danger of misleading consumers."

In further disciplinary action, AOC was ordered to remove a letter from the ACCC that was displayed in a folder of customer testimonials from September 2007 to February 2009.

According to the ACCC website, the letter was sent in relation to an earlier investigation into AOC’s advertising practices; it thanked the retailer for cooperating with that investigation and advised AOC that no further action would be taken.

AOC exhibited the ACCC letter on its Pitt Street sales desk as part of a folder of customer testimonials, an action that the ACCC deemed inappropriate.

"The display of the ACCC letter alongside customer testimonials could wrongly lead consumers to conclude that the ACCC approved of, or endorsed, AOC's advertising practices," Kell explained.

AOC ceased its misleading price comparisons and removed the ACCC letter from its promotional material only after the ACCC decision.

Jeweller contacted the AOC for comment last week, however Blaiklock declined to comment.

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