Bunnings, (very) expensive law suits, tips to avoid them
A long running Commerce Commission’s case against Bunnings “lowest prices” advertising has ended in all charges being dismissed. The case was an expensive one for ComCom, who spent about $1 million in external lawyer fees and over 2,500 internal staff hours last year, and it would have been costly for Bunnings to defend. The root cause of the case was catchy advertising by Bunnings.
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Broad and catchy advertising statements are an essential tool in effective marketing, but they can’t be used to mislead customers under the Fair Trading Act. How do you draw the line between misleading and smart advertising? The long legal battle between Bunnings and the ComCom explored this issue in depth.
Bunnings markets its position as value retailer through extensive advertising which includes phrases such as "lowest prices are just the beginning", "lowest price guaranteed", and "unbeatable prices”. These statements are accompanied by their lowest price guarantee,“if you happen to find a lower price on the same stocked item, we’ll beat it by 15%”.
The Commerce Commission alleged that the public were misled by such advertising into thinking the hardware chain’s prices were the lowest prices on offer in the market (with rare exceptions) when on a significant number of occasions it was not.
The Court disagreed, or more specifically, found that the Commission failed to prove charges (that the advertising was false and misleading) beyond reasonable doubt. The judgment provides useful clarifications of the law relating to broad marketing statements. It also highlights how the Commission may
Here is a checklist (with examples from the Bunnings case) of things to consider to ensure marketing statements don’t fall foul of the Fair Trading Act and potentially avoid an expensive argument with the regulators.
Disclaimer
This publication should not be construed as legal advice. It is necessarily brief and general in nature. Please seek professional advice before taking any action in relation to the matters discussed in this publication.