In some of last year’s articles we talked about the TGA’s powers with regard to price promotions and the TGA’s rules and regulations surrounding such promotions. In this month’s article we will look at the Australian Consumer Law in some more detail and how it may affect you and your pharmacy business.
We will, in particular, focus on comparative advertising which can be an effective way to advertise goods.
However, pharmacies must be careful, as their advertisements will most likely be scrutinised by at least one competitor pharmacy and sometimes even the ACCC.
A recent case
Just last year for example, the ACCC commenced its investigations against pharmacy giant Chemist Warehouse following a complaint by the Pharmacy Guild and National Pharmacies.
In Pharmacy Guild’s complaint, Anthony Tassone, president of the Pharmacy Guild Victoria, provided two examples as to how Chemist Warehouse is misleading consumers. In both examples, Chemist Warehouse published the “normal price” as well as the amount saved on their receipts.
Mr Tassone stated that:
“the practices that are causing concern are representations on sales receipts or dockets whereby Chemist Warehouse are claiming there is a ‘normal price’ and a saving being enjoyed by the customer from shopping with Chemist Warehouse that day”.
One receipt provided by Mr Tassone as an example was a receipt for Oroxine 100mcg tablets with a claimed saving amount of $2.29 and a sales price of $2.20.
Mr Tassone explained that “Oroxine 100mcg dispensed for a holder of a Safety Net entitlement card on a valid PBS prescription from a PBS-approved pharmacy would be $2.20 in all instances.” This means there is no saving at all.
The question the ACCC has to determine is whether the saving prices listed on Chemist Warehouse’s dockets are accurate in the circumstances or whether they are misleading.
So what actually is misleading and what is not?
The ACCC has published a set of rules applicable to comparative advertising.
Under these rules, misleading conduct may include:
- a ‘before’, ‘was’ or ‘strike through’ price that is not the price those items were sold for in a reasonable period immediately before the sale period started.
- a ‘before’, ‘was’ or ‘strike through’ price where only a limited proportion of sales were at the higher price in a reasonable period immediately before the sale period started.
- a comparison between ‘cost/wholesale’ and ‘sale’ prices if the ‘cost/wholesale’ price is greater than what the pharmacy paid for the products.
- a price comparison with a competitor’s price for identical goods, but the stated price is taken from a different market or geographical location.
- ‘savings’ or ‘discount’ statements when compared to the recommended retail price (RRP), but the goods have never been sold at the RRP or the RRP does not reflect a current market price.
Further, pharmacies may also mislead consumers about prices if they:
- promote a ‘sale’ or ‘special’ price which is not in fact a temporary sale price, thus creating an unwarranted sense of urgency to make an immediate purchase; or
- represent that an advertised price is the total price that you will have to pay when it is not.
Some examples of ACCC’s powers
While we are yet to see whether, following the ACCC’s investigations, Chemist Warehouse has complied with the rules set out above, other retailers have successfully been prosecuted by the ACCC for misleading conduct.
Not long ago, for example, one of Australia’s largest musical instrument retail groups was fined a whopping $80,000.00 by the ACCC. The retailer advertised ‘Was—Now’ price claims in its Christmas catalogue which turned out to be false since the items had been sold in the pre-Christmas period substantially below the claimed ‘Was’ price.
The ACCC has taken similar action against a major fashion retailer which had struck out the prices on certain items and written new prices underneath. This led consumers to believe that the items were previously sold at the higher price while in fact the items were never sold at the higher struck out price. The retailer was fined $37,500.00.
Claims made in comparative advertisements must be accurate, balanced and capable of substantiation.
To avoid negative consequences for your pharmacy business, if there is any doubt, you should always seek specialised legal advice before publishing any advertisements or information to your customers. Talk to our Pharmacy Law Experts