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Retailers are being warned to make sure competition closing dates are clearly displayed, after a major supermarket chain was fined $17,000 for selling cereal promoting a competition that had closed.
Progressive Enterprises kept displaying cereal boxes offering a chance to win a holiday for up to three months
after the competition had closed - even after receiving complaints from disappointed customers and the Commerce Commission.
The Manukau District Court fined the company on Wednesday after finding it guilty of offering a prize it had no intention of giving out. Commerce Commission chair Paula Rebstock said the case was a warning to businesses to make sure they had the right systems in place.
"Not only did the situation with this cereal mislead consumers, who thought they could enter a competition, but it potentially harmed the business of other cereal makers who may have lost sales due to the cereal prize promotion," she said.
Progressive, which has 150 supermarkets under the Countdown, Foodtown and Woolworths banners, ran a promotion between May 25 and August 31, 2006 offering customers a chance to win one of five trips to Australia. But while the offer was made on a sticker outside the cereal box, the closing date of the competition was only revealed in the terms and conditions inside the sealed packet.
Consumer magazine editor David Naulls said the "pretty substantial" fine handed out to Progressive should send a message to other companies. "Consumers are, like most people, attracted by special offers," he said. "If [the closing date] was clearly marked on the outside, consumers could have made an informed decision about the promotion."
Richard Manaton, Progressive's general manager of marketing at the time of the promotion, said the company regretted the "series of errors" that had led to the mistake.
"We have since reviewed and changed our processes to avoid this happening again," he said.
Progressive used the competition to promote its own Signature Range brand of cereal.
Retailers Association chief John Albertson said stores selling products made by someone else needed to be just as careful. "Many [promotions] are originated by manufacturers, but the retailer, who is point of sale with the consumer, is the one who carries the responsibility," he said.
"If you're selling it you've got to be responsible for it."
Last month Progressive's lawyer, Campbell Walker, told the court the company could not be found guilty because staff stocking the shelves did not know the competition had closed.
But the court said the fact that shelves were stocked by relatively junior staff was no excuse.
It found the company guilty of breaching the Fair Trading Act, an offence which carries a maximum fine of $200,000.
Ms Rebstock, of the Commerce Commission, said it was disappointing that a company the size of Progressive did not have working systems to prevent this kind of error.
