Case Brief: Commerce Commission v Bunnings Ltd [2021] NZDC 8918

November 26, 2021
Summary

Judge BA Gibson dismissed charges laid by the Commerce Commission against Bunnings for making false or misleading representations about its lowest price guarantees.

Background

The Commerce Commission laid 38 charges against Bunnings for making false or misleading representations between 17 June 2014 and 29 February 2016. The charges were based on adverts and uniform signage saying things like "lowest prices are just the beginning", "lowest prices guaranteed", "nobody beats our prices", and included the ‘lowest price guarantee’ "if you happen to find a lower price on the same stocked item, we'll beat it by15%".

The Commission claimed the public were liable to be misled into thinking Bunnings offered the lowest prices in the market on all items always, when this was not true on many occasions.

The Case

The words 'liable to mislead the public' are not defined in the Fair Trading Act but are determined by an analysis of the facts and circumstances of the particular case. These were criminal charges and the Commission had the burden of proving the statements were liable to mislead the public beyond reasonable doubt. However, it did not have to prove that anyone was actually misled.

What representations were made?

The Judge found that tagline phrases such as "lowest prices are just the beginning "are simply holistic statements of Bunnings' position in market. They are not representations.

The Judge also rejected the Commerce Commission argument that a significant number of Bunnings’ customers would have considered Bunnings offered the lowest price on each individual product in all its stores at all times, with rare exceptions. Instead, he confirmed that consumers can be trusted to use their common sense. Most would be well aware of the large number of products stores like Bunnings and Mitre10 carry and the need for Bunnings to have time to adjust its prices to react to competitors' movements.

The Judge considered the advertising material conveyed a representation that, if a consumer finds a lower priced item in the same range another store, Bunnings will honour its guarantee to have the lowest price by matching it and discounting it by 15%.  This is a clear signal to customers that not all products at Bunnings will be the lowest priced in the market, otherwise there would be no need for this guarantee.

 

Was the representation misleading?

A degree of "robust realism" is needed when assessing whether promotional material is false or misleading. In this case, the Judge found the advertising would be unlikely to mislead consumers unless the Commission can establish a pattern of prices higher than Bunnings' competitors that is unreasonable in all the circumstances.

Both sides presented extensive expert evidence. In the end, the Judge concluded that there was no reliable evidence about Bunnings' prices across its whole range, including on the almost 70% of products available at competing outlets.

There were a number of deficiencies in the price comparison data collected by various agents for both sides. Some were designed to be used for every-day price setting rather than to gather accurate statistical data, and many did not accurately represent the full range of non-exclusory products. Overall, the Judge found an acceptable range where Bunnings was not the lowest or same priced item was approximately 15%. These items are effectively covered by the lowest price guarantee, which, when activated, means Bunnings always will have the cheapest prices.

The lowest price guarantee would also alert customers to the fact that not every item at Bunnings will have the lowest price, but it offered a remedy to achieve this.

Overall, the Judge concluded there was no hard proof of what customers would believe the advertising material to mean, or that they were actually mislead, and there was no evidence of customer complaints.

 

Result

The Commerce Commission could not prove the charges beyond reasonable doubt, so the case was dismissed.

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