In advertising, particular selling techniques seem to give rise to problems and prosecutions by the Australian Competition and Consumer Commission (ACCC), as well as actions by competitors. If you are creating an advertising or marketing campaign and wish to use these techniques, you must treat them with care. In our two-part series, we step you through the three advertising techniques you need to know. Below, we consider comparative advertising and two-price advertising before moving on to disclaimers and fine prints.

Comparative Advertising

Comparative advertising is legal in Australia, and can be very persuasive. It is, of course, important that the advertiser or marketer justifies any claims of price or performance with proper evidence.

One of the leading cases in this area concerns the Duracell bunny. In mid-2002, the Full Federal Court handed down its decision in this matter. In short, the matter concerned two different types of batteries manufactured for retail sale in Australia. One is carbon zinc, and the other is Alkaline. Alkaline batteries are more technologically advanced, powerful and expensive to produce than the carbon zinc type. The advertiser, Gillette (the makers of ‘Duracell’), produced alkaline batteries and the complainant, Energizer (the makers of ‘Eveready’), manufactured both kinds.

Rather than comparing its alkaline battery product with Energizer’s alkaline battery product in its television ads, Duracell chose to compare its alkaline battery with Energizer’s carbon zinc battery product. As we mentioned above, carbon zinc batteries are less powerful and expensive than an alkaline product.

During the litigation, Duracell modified the original advertisements to include spoken and superscript reference to the fact that the company compared their batteries with Energizer’s super heavy duty batteries. Of note, the superscript, “Energizer’s super heavy duty is a cheaper non-alkaline battery”.

The Full Federal Court held that this made the situation clear. Namely that the comparison was between Duracell’s alkaline battery, and a cheaper non-alkaline battery. This is a fair basis for comparison, and so the advertisement got the thumbs up. The fact that the ad didn’t mention that Energizer also manufactures a range of alkaline batteries seems unnecessary as “there is no legal or ethical obligation on the trader to publicise the full range of a competitor’s products, and reasonable viewers would not think otherwise.”

This case demonstrates that it is apparently possible to advertise your product by selectively comparing it to an inferior product of your competitor. This is the case even though your competitor produces a more comparable product, provided your advertising makes it clear to the consumer what you are comparing.

Two Price Advertising

Two Price Advertising is commonly used to attract consumers to the idea that they are paying less than they otherwise would. Sometimes the comparison is with a company’s own previous or normal price, and sometimes the comparison is with a competitor’s price or the recommended retail price.

It is necessary to ensure that these comparisons are real and not illusory and that they represent a genuine saving. The advertiser or marketer must be able to substantiate the comparison based on the actual factors of the particular case.

Was/Now Advertising and Allan’s Music Group

Adelaide’s Federal Court fined Allan’s Music Group Pty Ltd, a major musical instrument retail group, $80,000 for misleading and deceptive conduct. In particular, nine counts of making false or misleading misrepresentations concerning price.

The company pleaded guilty to those nine charges that related to false “WAS – NOW” price claims in its Christmas 2000 catalogue. In Allan’s catalogue, it did not sell specified items in the pre-Christmas period at the “WAS” price, but rather at prices substantially lower.

It turned out that the claimed “WAS” price in the catalogue was, in fact, a prior recommended retail price as opposed to an actual price. During litigation, the company offered to contact the customers who purchased the specified items and offer them a $50 gift voucher or, if Allan’s could not contact them, to donate $50 to charity.

The judge noted this offer but also noted that the extent to which Allan’s departed from the true position significantly exceeded $50, and in some cases amounted to a difference in respect of $1,000. The ACCC regarded this conduct as being particularly blatant and reckless and pursued it as a criminal prosecution.

Questions? Get in touch with LegalVision’s advertising and marketing lawyers on 1300 544 755. In the meantime, you can keep reading about advertising techniques in our article on disclaimers and fine prints.

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