17 December 2004
Saatchi & Saatchi convicted for misleading advertising
Saatchi & Saatchi Limited was fined $6,000 in the Wellington District Court today, after pleading guilty to breaching the Fair
Trading Act in relation to an advertisement prepared for Telecom New Zealand Limited promoting a Telecom homeline/Sky TV
package. The advertisement appeared in The Evening Post and The Press newspapers on 5 February 2002.
Chair Paula Rebstock said this was a significant case for the Commerce Commission as it was the first time successful
action had been taken against an advertising agency, in relation to advertising prepared for a client. The Commission
entered into a settlement with Telecom late last year in relation to the same advertisement, where Telecom acknowledged
it had breached the Fair Trading Act and agreed to review its compliance procedures.
“Saatchi & Saatchi, through the role it played in developing and publishing the advertisement, was also responsible under the Fair
Trading Act for ensuring that the advertisement did not contain false or misleading representations,” she said.
The advertising related to the ‘TV Line’ package, which was part of a range of packages Telecom had put together with
Sky Network Television Limited. The package provided consumers with Sky TV Start Up (standard domestic Sky TV channels)
and monthly line rental for a residential phone.
Given the urgency with which the advertising was required by Telecom, Saatchi & Saatchi prepared an advertisement for the TV Line package by modifying an earlier advertisement. Telecom’s
communication brief to Saatchi & Saatchi stated as mandatory that it was ‘important to make it absolutely clear that Sky Sports channels are NOT part of
the standard package.’
The advertisement featured 15 men sitting on armchairs in the formation of a sports team photograph, accompanied by the
‘Now’s the perfect time to join the club. Sign up for our TV Line package and keep up with the cricket on Sky TV –
without having to pay the regular $99 installation fee. This means you’ll get Sky TV Start Up and your Homeline (monthly
line rental) for just one low monthly bill of $59.95.’
In small print at the base of the advertisement it was stated that Sky Sports channels were not part of the TV Line
In sentencing, Judge Touhy said that people who wanted to watch sport channels were misled because the offer excluded
those channels. While the Judge accepted the error was not deliberate he did say that the level of carelessness by
Saatchi & Saatchi and Telecom was quite high.
Ms Rebstock said that not only was a consumer not able to ‘keep up with the cricket’ by purchasing the TV Line Package,
it was not disclosed anywhere on the advertising that in order to receive Sky Sports, consumers would have to pay an
additional $8.00 per month.
“The small print significantly altered the overall impression given by the advertising, and the representations that
the service was available for $59.95 was clearly misleading.”