COMPLAINT NUMBER 15/528

AWAP 15/003

COMPLAINANT Vodafone New Zealand

ADVERTISER The Warehouse Limited

ADVERTISEMENT The Warehouse Television, Website, Bus, Radio, Instore

DATE OF MEETING 20 January 2016

OUTCOME Upheld, in Part

SUMMARY The advertisements for The Warehouse Ltd’s new service, Warehouse Mobile, featured comparisons between Warehouse Mobile’s standard prepay rates and those of four other telecommunications providers: Vodafone, Spark, 2Degrees and Skinny Mobile. The advertisement stated, in part:

“Warehouse Mobile. Make the switch for 2c per text, 4c per min, 6c per MB. NZ’s lowest standard prepay rates*. *Based on a comparison of all advertised prepay standard rates for NZ calls, text and data by NZ operators as at 23rd November. Standard NZ person to person calls and texts, and NZ data only.”

The advertisement appeared on: television, radio, Advertiser website (www.warehouse.com), bus, billboard and instore. The website also included an “Our Pricing” table which detailed the rates that formed the basis for the comparison. One of the standard rates identified was for Vodafone’s Pay & Go plan detailed as 20c per text, 20c per minute and 20c per MB. The Complainant, Vodafone New Zealand, was of the view the advertisement was misleading because the standard rate for its Pay & Go per text rate changed on 16 December 2015 from 20c per text to 1c per text. The Complainant submitted that, despite informing the Advertiser of their new 1c standard text rate, it continued to advertise that Warehouse Mobile had “NZ’s lowest standard prepay rates” even though it was misleading. The Advertiser submitted that the price comparisons were not misleading or deceptive or likely to mislead customers. The Advertiser said “the Campaign material referred to in the Complaint clearly states that the standard rates being compared were ‘as at 23 November 2016’ which was and remains accurate. The Campaign compares like products in the market being everyday rates that are always available on a particular plan, as opposed to any time limited offers or other promotional rates that may apply from time to time. Vodafone

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acknowledged that the comparison [w]as valid as in its letter dated 16 December 2016 its states that WM was no longer able to claim it has ‘NZ's lowest standard prepay rates’.” The Panel accepted the advertising, including the claim “NZ’s lowest standard prepay rates” and the “Our Pricing” comparison table was correct until the Complainant, Vodafone, changed their standard text rate for their Pay & Go service indefinitely on December 18, 2015 to at least 20 January 2016. The Panel determined that, allowing reasonable time for the competitor’s rate change to be confirmed, and the aforementioned materials to be removed from circulation, the television, radio, website and online advertisements were Not Upheld as they were accurate at the time of circulation and were removed within an acceptable timeframe. The Panel was of the view the claim “NZ’s lowest standard prepay rates” was absolute, not aspirational. It said the claim created an overall impression that Warehouse Mobile’s standard rates were the lowest. As such, once the competitor’s rates dropped, the Panel was of the view the claim required more than a date and time price check comparison or an ‘as at’ reference to support it. The Panel also noted the Advertiser continued to circulate the advertisements instore, on billboards and on the back of buses between 18 December 2015 and 20 January 2016. The Panel said from 18 December the claim could no longer be substantiated and the comparison was likely to mislead or deceive consumers as the comparative elements were no longer accurate and misled by falsely claiming a price advantage. The Panel said the Advertiser had reasonable opportunity to remove the remaining advertisements from circulation in January and as the claim could not be adequately substantiated, this impaired public confidence in advertising, was likely to mislead the consumer and created a misleading representation. Accordingly, the Panel ruled to Uphold the complaint, in part. [Advertisements to be removed] Please note this headnote does not form part of the Decision.

PROCEDURE The Chairperson ruled to deal with the matter by “adjudication with attendance of the parties” pursuant to Rule 3 of the Complaints Procedures of the Advertising Standards Complaints Board. This system was designed to resolve disputes between competitors, and a Panel was appointed. THE PANEL Chairman – Ms J. Robson (Chairman of Advertising Standards Complaints Board). Co-panellists – Mr N. Keats (Alternate Industry Member of the Advertising Standards Complaints Appeal Board) and Ms S. Taylor (Public Member of the Advertising Standards Complaints Appeal Board). THE PARTIES The Complainant, Vodafone New Zealand supplied written submissions. Oral submissions were presented by D. Broadmore, Senior Associate – Buddle Findlay and Z. Summers, Head of Commercial, Product and Digital – Vodafone New Zealand

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The Advertiser, The Warehouse Limited, supplied written submissions. Oral submissions were presented by M. Sumpter, Partner – Chapman Tripp and T. Benyon, CEO – Group Sourcing Support and TWL Merchandise PANEL DECISION The Chairman of the Advertising Standards Complaints Board directed the Panel to consider the complaint with reference to Basic Principles 2 and 3 and Rule 2 of the Code of Ethics and Principle 1 Guidelines 1(a), 1(b) and 1(c) of the Code for Comparative Advertising. Basic Principles 2 and 3 of the Code of Ethics required the Panel to consider whether the advertisement impaired public confidence in advertising and was misleading or deceptive or likely to mislead or deceive the consumer. Rule 2 of the same Code required the Panel to consider whether the advertisement contained any statement or visual presentation or created an overall impression which directly or by implication, omission, ambiguity or exaggerated claim was misleading or deceptive, was likely to deceive or mislead the consumer, made false and misleading representation, abused the trust of the consumer or exploited their lack of experience or knowledge. (Obvious hyperbole, identifiable as such, is not considered to be misleading). Principle 1 Guidelines 1(a), 1(b) and 1(c) of the Code for Comparative Advertising required the Panel to consider whether comparisons in advertisements were likely to mislead or deceive consumers. (Obvious hyperbole, identifiable as such, is not considered to be misleading), whether the comparative elements were accurate and informative and offered a product or service on its positive merits and if the price comparisons misled by falsely claiming a price advantage. The Panel acknowledged that in interpreting the Code, emphasis would be placed on compliance with both the principles and the spirit and intention of the Code. It noted the guidelines were merely examples and by no means exhaustive of how the principles are to be interpreted and applied. The Panel confirmed it had read thoroughly all written submissions, viewed all the advertisements relevant to the matter before it and taken into account the content of the oral submissions, based on the written submissions, as presented at the meeting. The Panel confirmed it had also taken the opportunity to address relevant queries to, and seek clarification from, the parties present. The Panel confirmed that its role was to consider the advertisements, and the claims made in them, from the perspective of their likely audience. It then had to consider the information provided to it and decide, when taken at face value, whether this information went far enough to substantiate the claims made in the advertisements. It also noted the onus fell on the Advertiser to substantiate the claims in the advertisements. The Panel noted the advertisements before it were for The Warehouse Ltd’s new service Warehouse Mobile and featured comparisons between Warehouse Mobile’s standard prepay rates and those of four other telecommunications providers Vodafone, Spark, 2Degrees and Skinny Mobile. It confirmed the claim subject to complaint was:

“Warehouse Mobile. Make the switch for 2c per text, 4c per min, 6c per MB. NZ’s lowest standard prepay rates*.”

The Panel viewed examples of the advertising, including television, radio, Advertiser website (www.warehouse.com), bus, billboard and instore. It noted the qualification for the claim included in the advertising stated: “*Based on a comparison of all advertised prepay

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standard rates for NZ calls, text and data by NZ operators as at 23rd November. Standard NZ person to person calls and texts, and NZ data only.” The Panel noted the “Our Pricing” table made available on The Warehouse’s website detailed the rates that formed the basis for the comparison. One of the standard rates identified was for Vodafone’s Pay & Go plan detailed as 20c per text, 20c per minute and 20c per MB. The Complainant, Vodafone New Zealand, was of the view the advertisement was misleading because the standard rate for its Pay & Go per text rate changed on 16 December 2015 from 20c per text to 1c per text. The Complainant submitted that despite informing the Advertiser of their new 1c standard text rate, it continued to advertise that Warehouse Mobile had “NZ’s lowest standard prepay rates” even though it was misleading. The Advertiser submitted the price comparisons were not misleading or deceptive or likely to mislead customers. The Advertiser said “the Campaign material referred to in the Complaint clearly states that the standard rates being compared were ‘as at 23 November 2016’ which was and remains accurate. The Campaign compares like products in the market being everyday rates that are always available on a particular plan, as opposed to any time limited offers or other promotional rates that may apply from time to time. Vodafone acknowledged that the comparison as valid as in its letter dated 16 December 2016 its states that WM was no longer able to claim it has ‘NZ's lowest standard prepay rates’.” The Panel accepted the advertising, including the claim “NZ’s lowest standard prepay rates” and the “Our Pricing” comparison table was correct until the Complainant, Vodafone, changed their standard text rate for their Pay & Go service indefinitely on December 18 2015, thus becoming ‘standard rates’. The Panel took into account the advertisement finished its tenure on television and radio and the Advertiser had removed the advertisement from its website and digital mediums, including AdWords and Youtube, between 20 – 23 December 2015. The Panel considered it fair to allow a reasonable time for the competitor’s rate change to be confirmed, and the aforementioned materials to be removed from circulation. Taking this into account, it determined the television, radio, website and online advertisements were unlikely to mislead consumers as they were accurate at the time of circulation and were removed within an acceptable timeframe. Therefore, the Panel ruled the radio, television, website and digital versions of the advertisement were not in breach Basic Principles 2 and 3 and Rule 2 of the Code of Ethics and Principle 1 Guidelines 1(a), 1(b) and 1(c) of the Code for Comparative Advertising. The Panel noted the bus, billboard and instore advertisements remained in circulation between 18 December and at least 20 January 2016. Therefore, the Panel was required to consider whether the remaining advertisements were in breach of the Codes. It noted concerns were raised by both parties about what constituted a ‘standard rate’; the qualification in the advertisement; whether the rates could still be considered cheaper overall; and the timeliness in which the advertisements were removed. It considered each issue in turn. Timeline The Panel noted Warehouse Mobile launched their product on 19 November 2015 and began the “lowest price standard rate” and table comparison advertising on 23 November 2015.

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The Complainant, Vodafone New Zealand, changed its Pay & Go per text rate on 16 December 2015 from 20c per text to 1c per text for “a limited time only”. The Complainant submitted that despite informing the Advertiser of their new 1c standard text rate, it continued to advertise that Warehouse Mobile had “NZ’s lowest standard prepay rates.” On 18 December, the Complainant removed the reference to the “limited time only” rate and made it a permanent standard rate per text for people on the Pay & Go service. During the 20 – 23 December 2015 period, the Panel took into account the television and radio advertisements completed their on air run and the Advertiser, despite their views the advertisement was not misleading, removed the advertisement from its website, including the comparison table and digital mediums, including AdWords and Youtube. The Panel noted the instore, bus and billboard versions of the advertisement were still available at the time of adjudication on 20 January 2015. Standard Rate The Panel noted initially the Complainant, Vodafone referred to their 1c per text rate as “for a limited time” only. The Advertiser said in relation to the new indefinite rate that “the only evidence of the 1 cent prepay text price found by WM in Vodafone advertising is on the Pay & Go tab of the Vodafone website… It is noted that this does not include reference to the 1 March 2016 expiry of the 1 cent rate advised on several occasions to WM representatives. WM consider that on the information available to it the Pay & Go prepay text rate of 1 cent is not a standard rate therefore no further action was or is required.” The Advertiser submitted that “the plain meaning of ‘standard’ rates is well understood by the average consumer to mean the everyday rates that are always available on a particular plan, as opposed to any time limited offers or other promotional rates that may apply from time to time, or the effective rates which may apply when using a Value Pack or Combo.” The Panel agreed. It said a standard rate would be considered by most consumers to be the everyday or usual rate charged which was accepted as normal or average. It confirmed that a limited time promotional rate was not a “standard rate”. The Panel said the advertisements before it compared the “standard rates” of various prepay plans and therefore the limited time promotional rate of 1c per text offered by Vodafone did not make the claim or comparison misleading. However, the Panel noted Vodafone subsequently removed the limited time only offer and implemented the 1c per text rate indefinitely on 18 December 2015, also notifying the Advertiser. The Complainant said that from that date, the 1c per text rate was Vodafone’s standard rate for their Pay & Go service as this was what consumers would be charged per text. The Panel noted the Complainant notified the Advertiser of this change at 7pm Friday 18 December 2015. The Panel also noted the Advertiser’s point that even though the “limited time only” disclaimer was removed, that it was not a standard rate because the reduction in price was not widely communicated to Vodafone staff and customers and had not been sufficiently publicised. The Complainant said it was not obliged to undertake a marketing campaign for its new rate or required to promote its new standard rate. The Complainant said regardless of what information was provided by Vodafone staff about the standard rate, it did not alter the

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standard rate being charged by Vodafone was 1c per text on their Pay & Go service from 16/12/15. The Panel agreed, it noted the key information about the standard rates was also available on the Complainant’s website, which it considered was a key piece of collateral and where the majority of consumers would go to obtain such information. On consideration of the above, the Panel accepted the advertising, including the claim “NZ’s lowest standard prepay rates” and the “Our Pricing” comparison table was correct until the Complainant, Vodafone, indefinitely changed their standard text rate for their Pay & Go service to 1c per text. It also noted the validity of the advertising prior to the change was not challenged by the Complainant. However, while the Panel agreed a change in prices being compared was a risk in comparative advertising, on learning of an amendment to a competitors pricing used in a comparative advertising campaign, an Advertiser should be entitled to make reasonable efforts to establish the validity of the pricing change and be allowed a reasonable timeframe to remove the advertisements. It said particularly considering the breadth of the campaign before it, the expectation of the Complainant for all material to be removed within an extremely short timeframe, over a weekend and right before the annual Christmas holiday period, was unrealistic in this instance. Having established that Vodafone’s rate was a standard rate after 18 December 2015, the Panel said its role was to consider whether the rate reduction made the claim misleading and whether the remaining advertisements were removed in a timely manner. Package comparison The Panel noted the Advertiser’s assertion that, regardless of Vodafone’s new standard rate of 1c per text, Warehouse Mobile still had the cheapest overall rates when the 2c per text, 4c per min, 6c per MB was considered as a package. The Complainant submitted it has packages which, when compared with Warehouse Mobile’s standard rates, would be significantly cheaper when the rates were calculated per text, per minute and per MB. The Panel was of the view Warehouse Mobile’s standard rates were not a package, nor were they presented as such in order to be evaluated as a potentially cheaper bundle. It was of the view the rates were simply the usual individual costs for each service. As such, the Panel said a comparison could not be drawn between the collective individual cost of the service as a package because the price advantage would depend on how the individual services were used by each consumer. Therefore, the Panel disagreed that Warehouse Mobile still had the lowest standard rates overall and this did not save the advertisement from being likely to mislead. Qualification The Panel noted the claim “NZ’s lowest standard prepay rates*” was asterisked with the following qualification “*Based on a comparison of all advertised prepay standard rates for NZ calls, text and data by NZ operators as at 23rd November. Standard NZ person to person calls and texts, and NZ data only.” The Panel noted the Complainant’s view that the claim represented Warehouse Mobile currently had New Zealand's lowest standard prepay rates as an existing fact, not as a representation of historic pricing.

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The Advertiser was of the view the “standard rates” being compared in the advertisement were clearly referenced “as at 23 November 2015” which it said was still accurate. The Panel acknowledged there was always a risk with comparative advertising that a competitor could drop their prices and while the claim in the advertisement was clearly and accurately substantiated, the claim “NZ’s lowest standard prepay rates” was absolute in nature. Therefore, in its mind, the qualification acted as a price check for a particular date and time, and did not fully support the absolute claim “NZ’s lowest prepay rates”. The Panel said once Vodafone’s standard text rate had been changed on 18 December, and the comparison table was removed, the claim was inaccurate and therefore likely to mislead consumer. Summary The Panel accepted the advertising, including the claim “NZ’s lowest standard prepay rates” and the “Our Pricing” comparison table was correct until the Complainant, Vodafone, indefinitely changed their standard text rate for their Pay & Go service on December 18 2015. The Panel determined that, allowing reasonable time for the competitor’s rate change to be confirmed, and the aforementioned materials to be removed from circulation, the television, radio, website and online versions of the advertisement were Not Upheld as they were unlikely to mislead consumers and were removed within an acceptable timeframe. Therefore, the Panel said the television, radio, website and digital versions of the advertisement were not in breach Basic Principles 2 and 3 and Rule 2 of the Code of Ethics and Principle 1 Guidelines 1(a), 1(b) and 1(c) of the Code for Comparative Advertising. The Panel was of the view the claim “NZ’s lowest standard prepay rates” was absolute, not aspirational and created an overall impression that the rates were currently the lowest. As such, once the competitor’s text rate dropped on 18 December 2015, the Panel was of the view the claim required more than a date and time price check comparison or an ‘as at’ reference to support it. The Panel noted the Advertiser continued to circulate the advertisements instore, on billboards and on the back of buses between 18 December 2015 and at least 20 January 2016. The Panel said as the claim could no longer be substantiated, the comparison was likely to mislead or deceive consumers. Consequently, it said the comparative elements were no longer accurate and were misleading by falsely claiming a price advantage. Therefore, the Panel ruled the instore, bus and billboard advertisements were in breach of Principle 1 and Guidelines 1(a), 1(b) and 1(c) of the Code for Comparative Advertising. The Panel said the Advertiser had a reasonable opportunity to remove the advertisements from circulation and as the claim could not be adequately substantiated, this impaired public confidence in advertising. The Panel said the claim created a misleading representation and the instore, billboards and bus advertisements were also in breach of Principles 2 and 3 and Rule 2 of the Code of Ethics. Accordingly, the Panel ruled the complaint was Upheld, in part. Decision: Complaint Upheld, in part DESCRIPTION OF ADVERTISEMENT

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The advertisements for The Warehouse Ltd’s new service, Warehouse Mobile, featured comparisons between Warehouse Mobile’s standard prepay rates and those of other telecommunications providers Vodafone, Spark, 2Degrees and Skinny Mobile. The advertisement stated, in part:

“Warehouse Mobile. Make the switch for 2c per text, 4c per min, 6c per MB. NZ’s lowest standard prepay rates*. *Based on a comparison of all advertised prepay standard rates for NZ calls, text and data by NZ operators as at 23rd November. Standard NZ person to person calls and texts, and NZ data only.”

The advertisement appeared in the following mediums: television, radio, Advertiser website (www.warehouse.com), bus, billboard and instore. The website also included an “Our Pricing” table which detailed the rates that formed the basis for the comparison. One of the standard rates identified was for Vodafone’s Pay & Go plan detailed as 20c per text, 20c per minute and 20c per MB. COMPLAINT FROM VODAFONE NEW ZEALAND

1. We write this letter to register a complaint in relation to an advertising campaign by Warehouse Mobile ("Warehouse Mobile") that purports to compare the standard prepay rates of New Zealand mobile prepay service providers ("Prepay Providers") for the purpose of promoting its own products.

2. Warehouse Mobile's advertising campaign makes express comparisons with

competitors and absolute claims which are deceptive, misleading and demonstrably false. We are concerned that this will have a significant impact on consumers and will unfairly affect our reputation as a competitor and those of other Prepay Providers.

3. The campaign involves advertisements appearing in a number of media which are

set out with examples and URL in Annexure A attached. Relevant parts of the Advertising Standards Code

4. The advertisements breach the following principles in the Code for Comparative Advertising and the Advertising Code of Ethics:

4.1 Comparative elements should be accurate and informative and should offer a

product or service on its positive merits. (Principle 1(a))

4.2 Price comparisons should not mislead by falsely claiming a price advantage. (Principle1(c))

4.3 Truthful Presentation - Advertisements should not contain any statement or

visual presentation or create an overall impression which directly or by implication, omission, ambiguity or exaggerated claim is misleading or deceptive, is likely to deceive or mislead the consumer, makes false and misleading representation, abuses the trust of the consumer or exploits his/her lack of experience or knowledge. (Obvious hyperbole, identifiable as such, is not considered to be misleading). (Rule 2)

5. The advertisements also breach the basic principles of advertising that no

advertisement should impair public confidence in advertising or be misleading or deceptive or likely to mislead or deceive the consumer.

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Unsubstantiated and misleading comparisons

6. The advertising campaign makes the following comparisons that are misleading and are likely to mislead consumers:

6.1 The first comparison is the claim that Warehouse Mobile has "NZ's lowest

standard prepay rates" ("Claim") of any of the Prepay Providers. The rates referred to in the Claim are 2c per text, 4c per minute and 6c per MB of data which a customer is entitled to with a top up of $10 every 31 days.

6.2 The second comparison is a pricing comparison table of rates listed on the

Warehouse Mobile website page www.warehousemobite.co.nz/pricing/ which states that it is "Based on a comparison of all advertised prepay standard rates for NZ calls, text and data by NZ operators as at 23rd November." The standard rates listed for Vodafone are 20c per text, 20c per minute and 20c per MB ("Rate Table"). These were the advertised rates for Vodafone's Pay & Go plan, which is the only calling plan with standard rates that Vodafone offers to customers.

The comparisons are dealt with together in this complaint.

7. On 16 December 2015, Vodafone reduced the standard rates to send a text in the

Pay & Go plan to 1c per text, with the per minute and per MB rates remaining at 20c. These rates have been communicated to customers on the Pay & Go plan and are listed under the 'Pay & Go' tab at www.vodafone.co.nz/prepay which is where the standard rates for the Pay & Go plan are advertised.

8. As Vodafone now has the lowest standard prepay rate to send a text of 1c, compared

with 2c per text with Warehouse Mobile, the Claim is misleading because it is no longer factually correct for all the standard Prepay Rates that Warehouse Mobile is advertising. For the same reasons the Rate Table is misleading because it does not accurately reflect the current in market standard prepay rates for Vodafone customers to send a text message.

9. By failing to make an accurate comparison between standard prepay rates to send a

text, the advertising breaches principle 1 (a) and (c) and rule 2. The false impression it creates also breaches rule 2.

Next steps

10. We have raised this matter directly with Warehouse Mobile who were notified on 16 December 2015 that the Claim and Rate Table were inaccurate and any advertising containing the Claim or Rate Table would be misleading and deceptive from this date. Despite this notification, Warehouse Mobile continue to use the Claim and Rate table which we see as a calculated delay to remove or amend its advertising during a key trading period.

11. As the key premise of Warehouse Mobile's advertising campaign is deceptive,

misleading and demonstrably false, we request that the Advertising Standards Authority address the matter with the urgency that it warrants and request that this matter be heard with urgency.

12. Please contact us if you require any further information about this complaint.

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Annexure A – Warehouse Mobile’s advertising campaign Media in which the advertisements appear after 16 December 2015: 1. Television commercial which has been airing in December 2015 (copy attached). 2. Statements on the Warehouse Mobile website (screenshots below); 3. Statement made on external websites; 4. In-store advertising (examples below) 5. 30 second radio advertisements (copy attached) 6. Billboards (example below) 7. Bus backs in main metro areas Examples of Warehouse Mobile Advertising 1. Television Commercial Copy attached (8MB) Voiceover: Warehouse Mobile is here with the lowest standard prepay rates in New Zealand That’s right, the lowest in the country and we’re saying it loud and clear, IT’S THE LOWEST How low? As low as 2,4,6. 2 cents per text, 4 cents per minute and 6 cents per megabyte. Simply top up $10 every 31 days and these low rates are yours. Yip, there’s no mincing our words, these rates are literally the lowest. So go ahead and make the switch, for2,4,6. Available at The Warehouse 2. Screen shots taken from the Warehouse Mobile website on 21 December 2015 www.warehouse.co.nz

www.warehouse.co.nz/pricing

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4. In-store advertising

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Take away flyer in store

5. Radio advertisement Copy attached (1MB) Script: Oh hello my fellow kiwis, we’ve got some big news. Warehouse Mobile is here and we’ve got the lowest standard prepay rates in the country. These rates are seriously low, how low you ask, as low as 2,4,6. 2 cents per text, 4 cents per minute and 6 cents per megabyte. Now you can stay in touch with whoever. Simply top up from $10 every 31 days and these low rates are yours. So go ahead and make the switch to Warehouse Mobile, its as low as 2,4,6. Now available at the Warehouse. Conditions apply.

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6. Billboard (photograph taken on 21 December 2015)

APPLICABLE ADVERTISING CODES OF PRACTICE Code of Ethics

Basic Principle 2 – No advertisement should impair public confidence in advertising.

Basic Principle 3: No advertisement should be misleading or deceptive or likely to mislead or deceive the consumer. Rule 2: Truthful Presentation - Advertisements should not contain any statement or visual presentation or create an overall impression which directly or by implication, omission, ambiguity or exaggerated claim is misleading or deceptive, is likely to deceive or mislead the consumer, makes false and misleading representation, abuses the trust of the consumer or exploits his/her lack of experience or knowledge. (Obvious hyperbole, identifiable as such, is not considered to be misleading).

Code for Comparative Advertising

Principle 1: Comparisons in advertising should not mislead or deceive or be likely to mislead or deceive consumers. (Obvious hyperbole, identifiable as such, is not considered misleading). Guideline 1(a): Comparative elements should be accurate and informative and should offer a product or service on its positive merits. Guideline 1(c): Price comparisons should not mislead by falsely claiming a price advantage.

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RESPONSE FROM THE ADVERTISER, THE WAREHOUSE LIMITED We refer to your letter of notification of 23 December 2015 regarding Complaint 15/528. Thank you for the opportunity to respond to the complaint. THE CODE The Advertising Standards Authority has identified the following parts of the Code of Ethics and Code for Comparative Advertising as relevant to this complaint:

Code of Ethics - Basic Principle 2: No advertisement should impair public confidence in advertising.

Code of Ethics - Basic Principle 3 - No advertisement should be misleading or deceptive or likely to mislead or deceive the consumer.

Code of Ethics - Rule 2 Truthful Presentation - Advertisements should not contain any statement or visual presentation or create an overall impression which directly or by implication, omission, ambiguity or exaggerated claim is misleading or deceptive, is likely to deceive or mislead the consumer, makes false and misleading representation, abuses the trust of the consumer or exploits his/her lack of experience or knowledge. (Obvious hyperbole, identifiable as such, is not considered to be misleading).

Code for Comparative Advertising - Principle 1 - Comparisons in advertisements should not mislead or deceive or be likely to mislead or deceive consumers. (Obvious hyperbole, identifiable as such, is not considered to be misleading).

Code for Comparative Advertising - Principle 1 Guideline 1(a) - Comparative elements should be accurate and informative and should offer a product or service on its positive merits.

Code for Comparative Advertising - Principle 1 Guideline 1(c) - Price comparisons should not mislead by falsely claiming a price advantage

THE ADVERTISING CAMPAIGN The Warehouse Limited launched Warehouse Mobile (WM) on 19 November 2015 as an alternative to existing NZ telecommunication offers. As part of WM's introductory promotion campaign (the Campaign) WM advertised that it had the "lowest standard prepay rates in New Zealand". This was on the basis of rate comparisons with other providers (Vodafone NZ, Spark NZ 2Degrees and Skinny Mobile) in November 2015, prior to the commencement of the Campaign. The Campaign was planned as a short term campaign involving radio and television advertising (scheduled to end on 20 and 21 December 2015 respectively) and website, instore, billboard and bus back advertising. As noted in the Complaint the pricing comparison table listed on WM's website stated that it is "Based on a comparison of all prepay standard rates for NZ calls, text and data by NZ operators as at 23 November". The standard rates listed for the Complainant (Vodafone) were 20 cents per text, 20 cents per minute and 20 cents per MB. In its complaint Vodafone has acknowledged that these were the advertised rates for Vodafone's Pay and Go Plan, which is the only plan with standard rates that Vodafone offers to customers. VODAFONE PAY AND GO TEXT RATE CHANGE

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Vodafone advised WM on 16 December 2016 that Vodafone's standard rates for text on the Pay & Go plan had been reduced to 1 cent per text and referred to the Pay & Go tab as www.vodafone.co.nz/prepay. Vodafone also alleged that WM was no longer able to claim it has "NZ's lowest standard prepay rates" and that WM's claim was therefore misleading and deceptive. Vodafone sought confirmation from WM that the Campaign advertising had been withdrawn from the market by 4pm 18 December 2015. In any event Vodafone's request that all advertising be removed within two days is unreasonable and unrealistic. WM reviewed the Vodafone website and noted that the 1 cent text rate was expressly referred to as being available "for a limited time" WM responded to Vodafone on 18 December 2015 advising that it disagreed with Vodafone's view as follows:

"The Claim makes it clear that the comparison is being made between standard prepay rates for NZ calls texts and data. The reference to "standard" is prominent, forming part of the headline message. The plain meaning of "standard" rates is well understood by the average consumer to mean the everyday rates that are always available on a particular plan, as opposed to any time limited offers or other promotional rates that may apply from time to time, or the effective rates which may apply when using a Value Pack or Combo".

WM concluded by saying:

"If Vodafone continues to hold the view that Warehouse Mobile's advertising is misleading or deceptive, we ask that you provide detailed reasons for this view as we do not consider this to be the case."

Vodafone responded on 18 December 2015 (Friday, 7.43pm) advising that:

"To avoid any further debate on the issue, we have removed the reference to "limited time" in our advertising". In the circumstances, continuing to advertise the Claim is wilfully misleading customers and is in flagrant disregard of the Fair Trading Act.

If the Claim continues to appear in any advertising on Monday 21 December 2015, we will be bringing this to the attention of the Commerce Commission and reserve our rights to take all further action that we see fit without prior notice."

Vodafone submitted the Complaint on 22 December 2015. ACTION BY WM WM immediately sought to verify the Pay & Go text price information provided by Vodafone on 18 December 2015 to determine what, if any, additional action was required given that the radio and television advertising associated with the campaign was a short term campaign scheduled to end by 21 December 2015 and other elements of the campaign would progressively end during January 2016. This included price checking in Vodafone and other stores and with the Vodafone customer care centre. Details are provided in the timeline summary attached as Attachment 1. Enquiries in Vodafone stores on 19 December 2015 resulted in Vodafone staff referring to the Vodafone "Better Connected" publication (the Publication) and the WM representative being provided with a copy of the Publication. Attached as Attachment 2 is a copy of relevant extracts from the Publication (noting that there are at least two versions of the Publication, one dated 1 December 2015 and another dated 15 December 2015). On 19 December 2015 a Vodafone customer care centre staff member referred to the Vodafone online system and advised a WM Representative that the standard prepay rate

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was 20 cents. Recordings should still be available to confirm this and other conversations with Vodafone customer care centre staff. The investigations over the weekend of 18 December 2015 and subsequently confirmed that the Pay & Go text price change to I cent had not been widely communicated (if at all) to stores and the Vodafone customer care centre and therefore the new rate was not a standard rate. More recently when WM representatives have enquired some Vodafone staff have advised that the Pay & Go prepay text rate is 1 cent however they have also advised that this is a time limited offer until 1 March 2016 and therefore this is not a standard rate. The only evidence of the 1 cent prepay text price found by WM in Vodafone advertising is on the Pay & Go tab of the Vodafone website. A copy of the relevant Vodafone webpage dated 11 January 2016 is attached as Attachment 3. It is noted that this does not include reference to the 1 March 2016 expiry of the 1 cent rate advised on several occasions to WM representatives. WM consider that on the information available to it the Pay & Go prepay text rate of 1 cent is not a standard rate therefore no further action was or is required. The ASA suggested that it would be helpful to remove the advertising in the interim while awaiting a determination of the Panel. Radio and television advertising had already ceased. WM advised that in "good faith" it would remove its online and website advertising, noting that some forms of advertising which had later contracted expiry dates would remain i.e. billboards and bus backs. ALLEGED BREACHES OF ADVERTISING CODES OF PRACTICE WM submits that the Campaign does not breach the ASA Advertising Codes of practice and in particular that that the price comparisons in the Campaign are not misleading or deceptive or likely to mislead customers. The Campaign material referred to in the Complaint clearly states that the standard rates being compared were "as at 23 November 2016" which was and remains accurate. The Campaign compares like products in the market being everyday rates that are always available on a particular plan, as opposed to any time limited offers or other promotional rates that may apply from time to time. Vodafone acknowledged that the comparison as valid as in its letter dated 16 December 2016 its states that WM was no longer able to claim it has "NZ's lowest standard prepay rates". A key issue for consideration therefore is what constitutes a "standard" rate. By removing the statement "limited time' from its website Vodafone has acknowledged there is a difference between a rate that is not a time limited offer and one that is. While Vodafone has asserted that the Pay & Go text rate of 1 cent is not a time limited offer WM's investigations documented in Attachment 1 lead it to the conclusion that this not the case. Even if there is a misunderstanding as to this element of the Pay & Go text rate, for the period relevant to this Complaint the price reduction to 1 cent was not sufficiently publicised or known in the market for it to be a standard rate. Vodafone's in store staff and customer care centre operators were either not aware of the price change or not until sometime after it had been made. The only change to advertising of Vodafone's standard prepay text rate that is evident is the change to the Pay & Go tab on the Vodafone website (Attachment 3). Attachment 4 is an

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example of a replacement for page 8 of the Publication. No similar action has been taken for the claimed change to Vodafone's standard prepay rates in the same Publication. In the Complaint Vodafone asserts that "these rates have been communicated to customers on the Pay & Go plan" however, assuming this did occur, this is informing a selected segment of tile NZ prepay customer database not the NZ prepay market. Other retailers within The Warehouse Group who resell Vodafone products (Warehouse Stationery and Noel Leeming) have not been notified of the Pay & Go text price change. CONCLUSION WM carefully considered the claims made in the Campaign to ensure that that they were not misleading or deceptive or likely to mislead customers. The price comparisons complied with all relevant requirements and therefore this Complaint should not be upheld. Although the key promotional activities of the Campaign, namely radio and television ended in accordance with the promotional schedule on 20 an 21 December 2015, WM acted quickly in good faith the remove online and website advertising material. All remaining advertising material is scheduled to be removed and this will be completed during the last week of January 2016. WM is not planning to recommence the former "lowest standard price campaign" Campaign but may in the future introduce other comparative advertising campaigns which comply with all regulatory requirements, including the ASA Advertising Standards.

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RESPONSE FROM MEDIAWORKS

The Warehouse Mobile radio advertisements were booked through The Radio Bureau via the media agency Starcom Worldwide. We accepted the content of the advertisements at face value and trusted that the claims made in the advertisements were accurate at the time. We look forward to hearing the outcome of the hearing and will comply with any orders that may result from the panel’s decision. RESPONSE FROM NZME I have received the complaint by Vodafone against The Warehouse. The audio NZME played was provided for by Agency, and, we understood, prepared in compliance with the Codes. There was nothing about the advertisement that stood out as clearly inaccurate or misleading. I will await the ASA’s Decision on this complaint RESPONSE FROM COMMERCIAL APPROVALS BUREAU

CAB has chosen not to file a response, deferring to substantiation provided by the advertiser

RESPONSE FROM ISITE MEDIA We have had a discussion internally in regards to this and do not feel we are in a position as a media owner to respond to this complaint, We oversee every advert that goes up to ensure as best we can that it adheres to the ASA standards, however believe the onus is on the advertiser to ensure promotions are clear and accurate, RESPONSE FROM AGENCY, DDB NEW ZEALAND I just wanted to let you know that this has been forwarded to The Warehouse and they have advised they would like to respond directly. RESPONSE FROM MEDIA AGENCY, STARCOM WORLDWIDE The Warehouse will respond on our behalf for this one.