The Competition and Consumer Commission of Singapore (CCCS) accepted voluntary undertakings from the owners and operators of the “ABC Bargain Centre,” “Valu$” and “ABC Express” retail outlets (collectively “Parties“), to cease the use of “Closing Down Sale” and “Fire Sale” advertisements from 30 September 2020. The CCCS noted that using such advertisements when firms are neither ceasing operations nor are in financial distress can constitute an unfair practice in breach of the Consumer Protection (Fair Trading) Act (Cap. 52A) (CPFTA) as they can mislead consumers into believing that there is a price benefit, which would only be available for a limited period.
Since taking over the enforcement of the CPFTA in 2018, the CCCS has only accepted voluntary undertakings from businesses after an investigation. This is the first time the CCCS accepted voluntary undertakings from businesses following the businesses’ own initiative to seek guidance from the CCCS. The Parties had approached the CCCS in 2019 to discuss their advertisements in the retail outlets. This is significant as it signals the CCCS’ willingness to provide guidance to businesses on the compatibility of their pricing practices with the CPFTA.
Price transparency is one of the CCCS’s key enforcement priorities in administering the CPFTA. It issued the Guidelines on Price Transparency (“Guidelines“) to explain how it would interpret the CPFTA in relation to the display/advertisement of prices and pricing practices such as time-limited discounts, free offers and price comparisons (read our update on the Guidelines here).
As the CCCS focuses on price transparency as an enforcement priority, businesses should review their pricing practices before the Guidelines come into effect on 1 November 2020 to ensure they do not fall foul of the CPFTA. Businesses should also refer to the Guidelines to obtain a better understanding of the types of behavior that may be considered unfair pricing practices. Please do not hesitate to get in touch with us if you wish to discuss how this development may affect your business operations in Singapore.
In more detail
The Parties approached the CCCS in 2019 to discuss their advertisements bearing the language “Closing Down Sale” and “Fire Sale,” which were displayed at the retail outlets. As these advertisements were displayed continuously without any end date, the CCCS took the view that they can constitute an unfair practice in breach of the CPFTA as they can mislead consumers into believing there is a price benefit that would only be available for a limited period.
To address the CCCS’s concerns, the Parties voluntarily offered the following undertakings:
- Remove any and all advertisements containing the word “Fire Sale” at their retail outlets.
- Not advertise any products as being available at a discounted price for a limited period at their retail outlets, where the Parties know or ought to know that the products will continue to be so available for a substantially longer period, unless the retail outlet in question is genuinely ceasing operations.
- Not advertise products as being available at a discounted price at the retail outlets where no genuine price benefit or advantage underlying the advertisement exists.
The Parties also undertook to cooperate with the CCCS on an ongoing basis to ensure that the obligations listed above are met, thereby ensuring continued compliance with the CPFTA. In accepting the voluntary undertakings, the CCCS noted that it reserves the right to investigate any breach of the undertakings or any other unfair practices by the Parties.
To this end, the CPFTA grants the CCCS a suite of investigatory and evidence-gathering powers when there are reasonable grounds for suspecting that (a) a supplier has engaged, is engaging or is likely to engage in an unfair practice, or (b) if this practice has been or is currently being knowingly abetted, aided, permitted or procured by a person. This includes powers to require documents, articles or information, enter premises, carry out the seizure of goods, among others.
Price transparency is one of the CCCS’s key consumer protection enforcement priorities. The CCCS noted that it is “closely monitoring other businesses that engage in similar unfair practices, where consumers are made to believe that there is a price benefit, and a scarcity in the availability of discounted prices for goods or services through misrepresentation of discounts or promotion periods.” The CCCS has also offered several examples of good practices for retailers intending to offer discounts such as:
- using genuine previously offered prices when making comparisons
- recording evidence of past sales and prices
- clearly and prominently stating the period of discounts
- only using “Closing Down Sale” advertisements when genuinely ceasing operations