ACCC Slaps Harvey Norman $1.25 Million Fine for Misleading Ad

A federal judge imposed on Friday a $1.25 million fine on Australian online retailer Harvey Norman (ASX: HVN) for its misleading advertisement. The fine was initiated by the Australian Competition and Consumer Commission (ACCC).

The case was over the sale of 3D televisions in September 2010 promoted by Harvey Norman in a catalogue distributed widely throughout Australia. The catalogue promised purchasers of the TV set that they could watch the 2010 Australian Football League and National Rugby League grand finals in 3D format.

However, 3D broadcasts were actually limited to six cities, namely: Brisbane, Newcastle, Sydney, Melbourne, Adelaide and Perth.

"In my view, this conduct was seriously misleading and deceptive on a significant and far-reaching scale," The Australian quoted Judge Berna Collier's decision.

"(This case)... paints a picture of an expensive, misleading and calculated campaign of sizeable proportions, characterised by blatant and deliberate disregard of the truth, cynical strategies to capitalise on contemporary sporting events... and the contemptuous manipulation of the expectations of ordinary consumers in respect of so-called 'fine print,'" Ms Collier wrote.

Harvey Norman acknowledged it went against the Trade Practices Act and agreed to the court's $500,000 fine for the 3D TV ad promo and another $750,000 penalty for breaching fine-print advertising rules. However, the retailer insisted the breach was not intentional.

"The judge was not entitled to come to that conclusion based on the joint submissions (from Harvey Norman and the ACCC) which were put to the court.

"We've been going for 50 years and we've never made a practice of intentionally misleading anyone," the retailer told The Australian.

For the third quarter, Harvey Norman reported a 2.9 per cent reduction in its Australia sales and 3.8 per cent drop in global sales which include New Zealand, Slovenia, Ireland and Northern Ireland. The decline was due to the weak retail environment in the countries where the retailer has outlets.