Shell admits misleading advertising of petrol prices: fined 10,000
Published10 May 2000
The Wellington District Court today fined Shell New Zealand Limited $10,000 after it admitted breaching the Fair Trading Act by making misleading claims about the price of petrol at its Franz Josef petrol station.
Commerce Commission Chair John Belgrave said that for four months from July to October last year the prices charged at the pumps at Shell's Franz Josef station were higher than those advertised on the roadside sign.
The price charged at the pumps changed several times during the period. On the date of the charges, representing the offending, customers were charged 10.2 cents a litre more than advertised for "ultra" petrol and were charged 2.1 cents a litre more than advertised for "ultra hi" petrol.
A year earlier, in March 1998, Shell had been warned by the Commission about the same problem at the same petrol station. The warning stated that, in the Commission's opinion, Shell was at risk of breaching the Act, and further alleged breaches could lead to further action.
Today in court, Shell pleaded guilty to breaching the Act, which prohibits false or misleading claims about prices.
Shell's Franz Josef petrol station is self-service with no staff. The prices on the pumps are set automatically from Shell's head office in Wellington. The prices on roadside sign are changed manually by a contractor. The contractor is advised orally to change the prices on the sign.
Shell acknowledged that, despite the previous warning, its procedure was inadequate and did not ensure that the change had been made.
Mr Belgrave said that this appeared to be a case of sloppy procedures rather than a deliberate attempt by Shell to mislead customers.
"There is a message here for all businesses," Mr Belgrave said. "Take heed of Commission warnings and settlements, change the behaviour that has caused the problems and deliver on their promises.
"We see warnings and settlements as part of our education role. They are intended to help businesses understand and comply with the law. Where a warning is ignored or a settlement is not honoured we will look at taking further action. In this case, further action was prosecution."
Background
The price charged at the pumps changed several times during the period. In court, the Commission presented the following figures as representative of the differences.
Ultra
Ultra hi
Price charged at pump
$1.061 a litre
$1.111 a litre
Price on roadside sign
$0.959 a litre
$1.09 a litre
Shell has more than 400 retail petrol stations nationwide, from which it supplies more than 25 percent of New Zealand's fuel needs. Franz Josef is one of its smallest petrol stations.
