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28 October 2020

Pak’nSave store fined $78,000 for misleading pricing

Supermarket pleads guilty to breaching the Fair Trading Act.

Pak’nSave Mangere has copped a $78,000 fine for misleading consumers about its promotional prices and breaching the Fair Trading Act.

A Commerce Commission investigation found store customers were charged higher prices at the checkout than those displayed on shop shelves or advertised in price promotions.

During June and October 2018, the commission carried out mystery shops of the store to check advertised prices against those charged at the till. Discrepancies found included:

  • sliced salmon displayed at $8.99 but charged at $10.79 on four occasions

  • mushrooms displayed at $4.99 but charged at $6.99 on two occasions

  • avocados displayed at three for $5 but charged at $1.99 each on one occasion.

In sentencing, Judge McNaughton described the supermarket’s conduct as “repeatedly careless”.

“The pricing discrepancies related to a number of individual items across different departments of the supermarket and they were repeated, and the defendant did not immediately take steps to correct its pricing systems,” he said.

Commission staff pointed out the discrepancies to the store immediately following its mystery shops. However, when commission staff returned the following day and re-purchased the same products, the discrepancies were still occurring for some items.

The store’s “immediate failure to act was inexcusable”, Judge McNaughton said.

Pak’nSave Mangere only acted to fix the problem when it became aware of the commission’s investigation.

Commission chair Anna Rawlings said consumers should be able to trust the price displayed on the shelf is the price they’ll be charged.

“If a mistake is made, businesses should ensure consumers are compensated and take immediate steps to ensure that the mistake is not repeated … it is no defence to claim that error is somehow inherent in a business involving high volume, low value sales and regular changes in pricing.”

This case highlights the problems consumers face trying to navigate the confusing array of price promotions used by supermarkets.

Our latest supermarket price survey found products on promotion so often that consumers risk being misled about the savings they’re getting. Many of the items we tracked this year were routinely on special during the 12 weeks we monitored prices.

In September, we lodged a complaint with the commission asking it to investigate supermarkets’ pricing practices and use its market study powers to investigate levels of competition in the industry.

Our supermarket sector is one of the most concentrated in the world, with just two big chains: Countdown and Foodstuffs (owner of the New World and Pak’nSave brands). Each New World and Pak’nSave store is individually owned. Pak’nSave Mangere is owned by Kennedy’s Foodcentre (2003) Ltd.

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Can you help?

Have you been misled by a less than “special” supermarket deal? Have you noticed routinely discounted items being advertised as “special” offers? Have you got examples of confusing pricing from your local supermarket?

Let us know. Support our campaign for fair supermarket prices by sending your examples to [email protected].

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