Pay dirt

THE Australian Competition and Consumer Commission (ACCC) last week ordered GM Holden to offer refunds to up to 314 customers and to improve its trade practices compliance following a complaint by a rival car company that led to an investigation into its high-profile "employee pricing" advertising campaign.

The ACCC’s court-enforceable directive was the result of an investigation it conducted that ruled Holden had misled buyers with its "You Pay What We Pay" pricing campaign, which ran while the company extended further massive savings to its own employees but not the public.

The campaign ran from October to December last year and generated approximately 11,000 sales of vehicles with compliance plates prior to July 1, 2005.

But according to the ACCC, for a 19-day period during the campaign a parallel internal company deal was also conducted in which Holden employees received discounts on factory-fitted options and accessories and a discounted dealer-delivery fee, none of which was offered to the public.

When the advertising campaign started, a further special discount of between 25 per cent and 29 per cent was also available to employees – and not the public – for selected VZ Commodore variants and WL Statesman and Caprice models.

In financial terms, this meant that a consumer who, at the start of the promotion, purchased a VZ Commodore Executive sedan with air-conditioning as a factory-fitted option and a $1495 dealer delivery charge paid $4729 more to buy the car than a Holden employee buying the same car.

This is a point Holden disputes, however it has refused to release details on the basis that costs varied from car to car.

The ACCC has also refused to reveal details of its assessment.

GM Holden spokesman Jason Laird said that of the 314 customers affected during that 19-day period, all claims would be assessed on a case-by-case basis. The ACCC has said buyers would be entitled to a full refund.

"We will write to each of the 314 customers who fell within the range of vehicles that we offered on the second campaign to Holden employees," Mr Laird said. "We’ll work through it with them.

"That second campaign shouldn’t have been on while the employee campaign was on." He said it was an oversight and unintentional.

The ACCC has accepted court-enforceable undertakings offered by GM Holden to recompense owners.

During the campaign, Holden claimed: "For the first time ever, all Australians can enjoy the financial benefit of Holden employee pricing".

On a number of occasions during and after the campaign, GM Holden chairman and managing director Denny Mooney said he was pleased with the performance of the incentive. He said the company had too much inventory and needed to move it.

GM Holden believed that the inclusion of fine-print qualifications regarding options, accessories and dealer delivery fees limited the offer to the baseline price of the vehicle.

ACCC chairman Graeme Samuel said the commission’s view was that the headline statement "You Pay What We Pay" was so powerful that no qualification in fine print could undo the message it conveyed to consumers.

The ACCC said it was also concerned about the fine-print disclosure in advertisements, which stated that "You Pay What We Pay" does not include options and accessories or dealer delivery.

For example, Holden employees received a discounted dealer delivery charge of $671, which was referred to as a "sales administration fee".

"Our position is that the thrust and nature of the campaign was so powerful that these little disclaimers down the bottom were never going to inform consumers that in fact the deal being offered was not the same deal as employees of Holden were getting," Melbourne-based ACCC regional director Bob Weymouth told GoAuto.

"GM Holden dispute that. Their view is the sort of disclaimer was typical and everyone buying a car knows that the headline is about the base car and everything else is extra." Mr Weymouth refused to disclose the car company that lodged a complaint about Holden’s campaign, but said the commission had kept a "watchful eye" on pricing issues in the Australian auto sector over the past six months.

"It’s fair to say – and the fact that this came forward from a competitor – that it’s a very competitive marketplace for motor vehicles," Mr Weymouth told GoAuto.

"I’d think we’d hear pretty quickly from competitors, if not consumers, if somebody was stepping close to or outside the line." He said that the campaign’s complex nature meant that a complaint was more likely to surface from a rival brand, which would have had better understanding of the deal.

"In some ways a consumer was never ever going to come forward with the complaint because they wouldn’t have the information available to them to realise that the deal they were getting wasn’t the right deal," he said.

"It’s a good example of where the ultimate welfare of the consumer can actually be impacted and the consumer just doesn’t know that they’re getting a deal other than the one promised." Holden's undertakings
HOLDEN was quick to respond to the ACCC’s concerns. It made court-enforceable undertakings to: 1. Provide written notice to the consumers who purchased vehicles in 2005 between October 21 and November 9 that were subject to the special discount. The notice would offer an opportunity to return the vehicle for a full refund of the purchase price including additional charges.

2. Improve its trade practices compliance and have this reviewed by an independent third party.

3. Use its best endeavours to comply with any industry standards developed by the ACCC aimed at improving the quality, accuracy and availability of information to customers.

According to the ACCC, the undertaking given by GM Holden ensures that it was aware of its obligations under the Trade Practices Act and has in place policies, procedures and systems to ensure it delivers on promises made in future promotions.