Mitre 10 fined $13,500 for false prices claims

Mitre 10 fined $13,500

Media Release

Issued 5 April 2001/34

Mitre 10 fined $13,500 for false claims about prices
Warning to all chain stores about prices in branches

Distributing more than a million copies of a booklet that included false claims about prices led to Mitre 10 (New Zealand) Limited being fined $13,500 in the Auckland District Court today.

Commerce Commission Chair John Belgrave said that the prosecution should be seen as a warning to all chain stores that they must know what prices are being charged at their different stores before making claims about savings.

Mr Belgrave said that Mitre 10 stated in its "Summer Specials" booklet that "only these coupons give you the special coupon price!" However, some of the coupon prices were the normal shelf prices charged by some stores. At those stores there were no savings at all.

When interviewed by Commission staff, a Mitre 10 representative admitted that quite often the company had no idea what stores were charging for various items.

"This was totally unacceptable behaviour," Mr Belgrave said. "Mitre 10 launched a nation-wide promotion claiming that consumers could make savings, but it did not know the current shelf prices of some of its products and so could not know if the claimed savings were real.

"Furthermore, one of the company's stores had previously been warned by the Commission about similar problems with an earlier promotion, and a copy of the warning went to Mitre 10 (New Zealand).

"False claims about prices have the potential to disadvantage both consumers and competitors. Consumers pay more and competitors lose customers."

In this case, the claimed special prices that were the same as the day-to day shelf prices were $449 for a Morrison lawn mower, $79.99 for a Reflex line trimmer and $139 for a Bosch hedge trimmer.

Background

Section 13(g) of the Fair Trading Act prohibits false or misleading claims about prices. Courts can impose fines of up to $100,000 on a company and $30,000 on an individual.

Mitre 10 stores are owned and operated by franchise holders. Mitre 10 (New Zealand) Limited buys stock from manufacturers and on-sells it to its franchise holders. Mitre 10 (New Zealand) undertakes the catalogue advertising for all the retail branches nationwide. It decides on the prices to be promoted and authorises the advertising before it is published.

Commission media releases can be viewed on its web site www.comcom.govt.nz

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