Catchwords Trade Practices - television commercial referring to earlier rates and terms of hire published subsequent to price change - misleading and deceptive conduct. Trade Practices Act 1974 s.54 W.T.H. Pty Limited trading as Avis Australia v. Budget Rentacar System Pty. Limited trading as Budget Rent-A-Car. G143 of 1987 Sweeney, J. Sydney 23 July, 1987 yas 22SUL1I987 0 ba \ —\ FEDERAL COUNT OF, / ws AUSTRALIA AS vo £37 AL \ fé fete oar 4 , a Z IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G143 of 1987 ) ) GENERAL DIVISION BETWEEN: THE COURT W.T.H. PTY. LIMITED trading as AVIS AUSTRALIA Applicant BUDGET RENTACAR SYSTEM PTY. LIMITED trading as BUDGET RENT-A-CAR Respondent THE COURT: Sweeney J. PLACE : Sydney DATE : 23 July, 1987 MINUTE OR ORDER ORDERS THAT: - each party be relieved from further compliance with its undertaking given on 14 April 1987; the respondent by itself its servants and agents he restrained' from- (a) televising or otherwise publicizing an advertisement in the form of that exhibited as "DMV1" to the affidavit of Diane Mary Vandervalk sworn on 13th April, 1987 and filed herein so as to represent that: Note: (b) (c) (d) (1) The rental rate under the applicant's "Super Saver" programme for a three week hire of a Holden Gemini class motor vehicle is more than $29.00 per day; {ii) A three week period of hire of that class of vehicle under that programme is necesssary before a customer obtains a rental rate of $29.00 per day or less. The respondent pay the applicant's costs of these proceedings, including any reserved costs Liberty to apply to any Judge of the Court on two days notice be reserved to each party Exhibits be returned unless an appeal is lodged within 21 days. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G143 of 1987 GENERAL DIVISION —~— ee rer ~~ BETWEEN: W.T.H. PTY. LIMITED trading as AND This Australia AVIS AUSTRALIA Applicant BUDGET RENTACAR SYSTEM PTY. LIMITED trading as BUDGET RENT-A-CAR Respondent THE COURT: Sweeney J. PLACE Sydney DATE 23 July, 1987 REASONS FOR JUDGMENT is an application by W.T.H. Pty Limited, trading as Avis ("Avis") against Budget Rentacar System Pty Limited, trading as Budget Rent-A-Car ("Budget"), seeking the following relief:- 1. A declaration that the television advertisement published on Channel 9 in Sydney at 9.05am on Monday 13 April 1987 constitutes conduct which is misleading or deceptive or likely to mislead or deceive contrary to the provisions of Section 52 of the Trade Practices Act 1974 (as amended) ("the Act"). An order pursuant to Section 80 of the Act or alternatively an order restraining the Respondent by itself, its servants and agents from republishing the advertisement. An order pursuant to Section 80 of the Act or alternatively an order restraining the Respondent by itself, its servants and agents from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive contrary to the provisions of Section 52 of the Act and, without limiting the generality of the foregoing, from publishing or causing to be published the following or any similar statements: "Even if you used the Avis Super Saver for three weeks or more you'd pay more than that". "$29.00 per day - for 4 days or more" in the context in which these statements appeared in the television advertisement or in the context of any advertisement in the same form or to the same effect. Such further order, (including orders' for corrective advertising) pursuant to Section 87 of the Act (as amended) as the court may deem fit. An order restraining the Respondent from aiding, abetting, counselling or procuring or being in any way directly or indirectly concerned in or ae party to the conduct specified in the orders above. Such further or other orders as the court may deem fit. 7. Costs". At an anterlocutory hearing on 14 April 1987 Budget undertook that it would not until further order publish or cause to be published any statement in the terms as set out in paragraph 3 above. At the same time Avis gave the usual undertaking as to damages. The circumstances in which the commercial complained of was published were as follows:- 1. in the period immediately preceding the date of publication there was intense price competition between Avis and Budget in the car hire market, particularly in relation to the Avis "Super Saver" and the Budget "Dollar Driver" rates; 2. as from 29 March 1987 an advertisement was broadcast and published on behalf of Avis offering its Super Saver rates at a maximum discount of 30%, with a minimum rate of $33.00 for category B vehicles (which included Ford Laser and Holden Gemini vehicles) for a period of rental of 21 days or more; 3. on 6 April 1987 Avis decided to reduce its Super Saver Rate to $29. 4. on 6 or 7 April 1987 Budget responded by reducing its Dollar Driver rate from $33 to $29, for four days or more. 5. on 9 April 1987 the solicitors for Avis advised the solicitors for Budget that Avis had reduced its rate for Laser cars to $28.00 per day effective from that date and repeated an objection contained in a letter of 7 April 1987 to the Budget commercial, which is later set out, alleging that it was false and misleading; Avis on 9 April 1987 reduced its lowest rate to $28.00 per day for three days or more, and on the following day Budget responded by instructing "its corporate and licensee rental stations to offer as and from 10 April, 1987 Gemini motor vehicles at $28.00 per day or one dollar less than the comparable rate offered by the applicant or Hertz Australia pty. Ltd. whichever was the lower for four or more days hire"; on 9 April 1987 Budget instructed its advertising agency "to prepare another television commercial in a form which would not be affected by further reductions in the applicant's rental rate for Laser motor vehicles"; this new television commercial was approved by the Federation of Australian Commercial Television Stations on 10 April 1987 and copies of the commercial "were sent to all participating television stations with instructions to immediately exchange it" for a television commercial comparing the Budget rate of $29.00 per day for 4 or more days with the Avis rate of $33.00 per day from 21 days or more hire which had been shown prior to that date, and to destroy that earlier commercial; by reason of the manner in which television stations Prepare their programs and insert commercials in then, these instructions proved not to be immediately effective, and at 9.05 a.m. on 13 April there appeared on Channel 9, Sydney, the Budget commercial, the text of which was as follows:- "While Budget continues to bring you new innovative products like Plan-Ahead, Freedom Checks, Credit Cards and Home Delivery we still know what made us top. To prove it we are introducing Dollar Driver rates. Now you can rent our Holden Gemini for as low as $29.00 a day (on screen $29.00 per day - for 4 days or more). Even if you used the Avis Super Saver for three weeks you'd pay more than that, which is why I'm wearing their shirt. Budget's Dollar Driver rates will always drive your dollar further (on screen Budget Rent-a-Car drives your dollar further)". The commercial expressly stated that the Avis Super Saver rate was more than $29.00 per day. It referred to the Budget Dollar Driver rate as "$29.00 per day - for 4 days or more" and went on to say - "even if you used the Avis Super Saver for three weeks you'd pay more than that". In addition, the implication was clear that, whereas you could enjoy the budget rate of $29 if you hired for 4 days or more, you would need to hire the avis car for three weeks to qualify for its super saver rate. Avis decided on 9 April 1987 to reduce its Supersaver Rate from $33 to $28. Advice of that decision was telexed on 9 April to State Managers, State Sales Managers, State Franchise Managers and other Avis officers. There was some challenge by Budget to the speed and efficiency with which superseded Avis publicity material was removed from its stations, but it was shown, for example, that relevant hiring transactions were taking place at Melbourne Airport from 9 April at $28 per day. On the balance of probabilities I am satisfied that Avis cars at the Super Saver rate of $28 per day were widely available before the Budget commercial appeared on 13 April 1987, and that there was no requirement by Avis that its cars must be hired for a period of three weeks before the Super Saver rate applied. In my opinion, each of the challenged statements in the commercial constituted conduct which was misleading or deceptive or likely to mislead or deceive within the meaning of s.52 of the Act. Budget continued to defend the impugned commercial to the bitter end and the case is one in which injunctive relief is appropriate. The Court orders that:- 1. each party be relieved from further compliance with its undertaking given on 14 April 1987; 2. the respondent by itself its servants and agents be restrained from- (a) televising or otherwise publicizing an advertisement in the form of that exhibited as "DMV" to the affidavit of Diane Mary Vandervalk sworn on 13th April, 1987 and filed herein so as to represent that: (i) The rental rate under the applicant's "Super Saver" programme for a three week hire of a Holden Gemini class motor vehicle is more than (b) (c) (da) $29.00 per day; (ii) A three week period of hire of that class of vehicle under that programme is necesssary before a customer obtains a rental rate of $29.00 per day or less. The respondent pay the applicant's costs of these proceedings, including any reserved costs. Liberty to apply to any Judge of the Court on two days notice be reserved to each party. Exhibits be returned unless an appeal is lodged within 21 days. I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice Sweeney Dated: 23 July, 1987 am ae ee ee et Associate VG 143 of 1987 Counsel for the Applicant: Solicitors for the Applicant: Counsel for the Respondent: Solicitors for the Respondent: Date of hearing: 10 June, 1987 Mr. J.C. Kelly Freehill, Page Mr. D.M. Yates Corrs, Byrne Hollingdale Pavey Whiting & &