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Kogan Faces Federal Court Today Over ‘Fake’ Pricing Fight With ACCC

Kogan directors whose online operation Kogan.com is believed to be carrying a large amount of stock especially TV’s is set to face the Federal Court in Melbourne today after another run in with the Australian Competition and Consumer Commission.

The Company has taken the unusual step of running a full-page advertisement in today’s Financial Review in a direct stab at the ACCC case as the AFR only reaches a small audience of consumers.

This time round the allegations centre on claims the online retailer raised the prices of more than 621 products by about 10 per cent immediately before offering a 10 per cent discount, which was delivered when a consumer checked out.

The ACCC has labelled the discounts “Fake”.

The Tax Time promotion was coming under investigation when Kogan told visitors they only had “48 hours left!” to place an order. The ACCC claim that this left consumers with the impression they had only a limited time to purchase at the “discounted” prices.

As soon as the promotion ended Kogan reduced the prices further with several products priced at their pre-promotion prices, the consumer watchdog alleged in a court filing last month.

Kogan intends to defend the ACCC claims that they misled consumers about discounts by arguing its prices rise and fall all the time.

The AFR long body copy advertisement has given a hint of Kogan’s defence claiming, “We have over 100,000 products listed on our site, the prices of these products change all the time – sometimes they go up, sometimes they go down – that’s how an e-commerce company focused on price leadership and efficiency should be operating in 2019,”.

Kogan is also expected to argue that it did not claim “10 per cent off” during the 2018 tax-time promotion but made clear the 10 per cent price reduction applied at the checkout.

According to the AFR Kogan believes the ACCC’s case may have ramifications for other online retailers who change prices regularly in response to customer demand, competitor prices, currency movements, supplier prices, inventory levels and distribution costs and conduct site-wide promotions.

They claim that other online retailers have dismissed these concerns, saying the guidelines around false and misleading statements in advertising and promotions are clear.

“I do not believe that it has ramification for all online retailers,” said the chief executive of one online retailer, who declined to be named.

Competition lawyer Patrick Gay, a partner at Herbert Smith Freehills, said sales needed to be genuine, whether or not retailers used dynamic pricing.

“What will be relevant is the impression given to the consumer and whether the relevant statement (i.e. that the price reduction applies at the checkout) is sufficient in context so as to not mislead customers as to the nature of the offer,” Mr Gay said.

“I think following the commencement of proceedings any online retailer with significant variations in pricing will need to consider when it’s offering a promotion what is the impression given to the consumer in the context of recent pricing and the nature of the advertisement,” he added.

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