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ASIA PACIFIC: AUSTRALIA

The Price Of Beauty & Jewelers Beware
Author: Peter LeGuay, Thomson Playford

Is the practice of discounting the retail price of your products by your retailers getting you down? Ever thought of making it a condition of supply that your retailers only sell your products at a price specified by you? Well think again. In February 2007, the Federal Court of Australia, in response to proceedings commenced by the consumer protection watchdog, the Australian Competition and Consumer Commission (ACCC), ordered the highest ever penalty for engaging in the practice of resale price maintenance against an Australian manufacturer of premium skincare, cosmetic and herbal products.

The Jurlique group of companies and its former managing director, Dr. Klein were order to pay a total of AU$3.4 million in penalties (plus court costs well in excess of AU$100,00) in respect of conduct that included the following:

• attempting to induce retailers not to sell Jurlique products at prices less than those specified by Jurlique;

• entering into agreements for the supply of Jurlique products in which one of the terms required the products not to be sold at prices less than those specified by Jurlique;

• withholding supply of Jurlique products on the basis that the retailer had sold the products at prices less than those specified by Jurlique; and

• using statements of prices in respect of Jurlique products that were likely to be understood as a floor price below which the products could not be sold.

In addition to the penalty, the Court granted injunctions against the Jurlique companies and Dr. Klein restraining them from engaging in such conduct in respect of Jurlique products for a period of 5 years.

Meanwhile jewellers in Australia have been warned – “was/now” price comparisons in an attempt to increase sales will not be tolerated if those comparisons are misleading.

In December 2006, the ACCC commenced Federal Court proceedings against Prouds Jewellers Pty Limited, a large national Australian jewellery company. The ACCC is alleging that since December 2005, 17 of Prouds’ “was/now” price comparisons advertised in 2 catalogue promotions were false or misleading in that Prouds usually sold its jewellery products for less than the “was” price, either during other promotions or in the usual course of business.

The case is currently being heard and the ACCC is seeking injunctions, declarations, corrective advertising, costs and orders that Prouds implement a trade practices compliance program.