International Law

Misleading advertising: Kleenheat Gas deceptive pricing

In Australian Competition And Consumer Commission v Wesfarmers Kleenheat Gas Pty Ltd Acn 008 679 543 the Federal Court made orders by consent against Wesfarmers Kleenheat Gas Pty Ltd in relation to conduct of Kleenheat Gas varying the pricing for bulk LPG supplied to particular customers, selected as 'Managed Monthly Accounts' or 'Quickhits', which differed from representations it made to those customers as to how their prices would move.

Justice Spender declared that in 2002 and 2003 Kleenheat Gas engaged in misleading or deceptive conduct in breach of the Trade Practices Act 1974 by:

• representing to particular customers that the price for bulk LPG supplied to them would vary according to movements in Kleenheat Gas' actual costs of supply, by reference to an external measure or benchmark (typically the Saudi Aramco Contract Price) or according to Kleenheat's 'list price' or 'ruling scale of prices', when in fact this was not, or was no longer, the basis on which the customer's price would be varied, and
• failing to disclose the existence and nature of the 'Managed Monthly Account' and 'Quickhit' price management practices by Kleenheat Gas, which were the actual basis for price variations for some customers.

Justice Spender granted consent injunctions restraining Kleenheat Gas for three years:

• from representing to bulk LPG customers that their price will be calculated in a particular way unless it intends to supply in accordance with the terms represented, and
• where Kleenheat's terms of supply to bulk LPG customers represent that the price will be calculated in a particular way, from charging to that customer a higher price than would result from such calculations unless by further express agreement with the customer.

The company was also ordered to pay the ACCC's costs in the proceeding in an agreed amount of $20,000.

The ACCC announced that the consent orders form part of an agreed resolution between the ACCC and Kleenheat Gas, together with Kleenheat Gas offering court-enforceable undertakings to the ACCC which provide for nearly $800,000 in refunds to be paid to an estimated 186 affected customers Australia-wide, the majority of whom are small businesses.

Full post as published by Australian Regulatory Compliance Review on March 04, 2008 (boomark / email).