Ad description

An online catalogue from the website www.christies.com for the auction house Christie's, seen on 11 January 2018. The catalogue was headed "INTERIORS INCLUDING PROPERTY FROM THE COLLECTION OF SIR DAVID AND LADY TANG AND PROPERTY FROM BYWELL HALL, NORTHUMBERLAND AND PROPERTY FROM HOWE, LONDON ... London 31 January 2018". The catalogue featured a number of items that would be available for bidding at the auction on that date, and quoted the corresponding prices in pounds sterling, US dollars and Euros. For example, the listing for lot 23 “FOUR MATCHING MAHOGANY AND EBONISED CANED BERGERE”' quoted the following prices: "£2,000-3,000 ... $2,700-4,000 ... €2,300-3,400". Text in small font at the bottom of the listing page stated "Other fees apply in addition to the hammer price - see Section D of our Conditions of Sale at the back of this Catalogue".

Issue

The complainant, who believed that non-optional fees and taxes, such as the buyer's premium and VAT, had not been made sufficiently clear, challenged whether the ad was misleading.

Response

Christie, Manson & Woods Ltd t/a Christie’s said that they had taken care to consider, with their external advisers, the CAP guidance on auction guide prices and non-optional charges. They stated that whilst they believed that their additional charges were clearly set out in their Terms and Conditions, they also took an additional step to include a prominent statement, which they believed was clear and visible, at the bottom of each page of their catalogues to direct consumers to the part of the Condition of Sale (Section D) where they believed the applicable fees were clearly explained. They stated that the font size of that fee statement at the bottom of the page was of the same size as all the writing on the page, save for title headings. They believed that this approach was consistent with the CAP guidance and was the appropriate method to use when the calculation of buyer’s premium was dependent on the hammer price of the item, and the application of VAT was dependent on the import status of the lot, as well as the hammer price of the item.

Christie’s also stated that their Terms and Conditions were reviewed by the Plain English Campaign to ensure that they were written in an intelligible manner which was readily understood by any consumer. They said Section D of the catalogue was clearly titled ‘The Buyer’s Premium, Taxes and Artist’s Resale Royalty’, with clear sections setting out the parameters for each type of charge; they believed that the information about the additional fees was set out in a clear and unambiguous manner.

Christie’s also said that prior to the start of each auction, a sale room announcement would be read out where the buyer’s premium was restated. Another notice, specifically stating the charges applicable for successful bids, would be on all Written Bid Forms and the stated amount payable would be the hammer price, buyer’s premium, applicable taxes and artist resale royalty. Any bidder online would receive other secondary reminders of the additional charges.

Assessment

Upheld

The CAP Code stated that quoted prices must include non-optional taxes, duties, fees and charges that applied to all or most buyers. However, VAT-exclusive prices might be given if all those to whom the price claim was clearly addressed paid no VAT or could recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable. The CAP Code also stated that if a tax, duty, fee or charge could not be calculated in advance, for example, because it depended on the consumers’ circumstances, the marketing communication must make clear that it was excluded from the advertised price and stated how it was calculated.

The ASA noted that the guide prices for the auction items or lots featured in the ad were expressed as price ranges, for example, the guide price for the listing for lot 23 “FOUR MATCHING MAHOGANY AND EBONISED CANED BERGERES” was expressed as “£2,000-3,000”. We considered that in general, guide prices represented sellers’ minimum expectation and were not necessarily the figures at which the items would be sold, but that they provided an indication of the price that consumers might expect to pay.

We noted that Section D of the Conditions of Sale, titled ‘D The Buyer’s Premium, Taxes and Artist’s Resale Royalty’, on page 138 at the back of the catalogue contained further information about the applicability and amount of the additional fees and taxes that might be payable. We understood from sub-section 1 ‘THE BUYER’S PREMIUM’ in the Conditions of Sale that a buyer’s premium would be payable by all successful bidders, but the amount would depend on the hammer price of each lot sold: “On all lots we charge 25% on hammer price up to and including £175,000, 20% on that part of the hammer price over £175,000 and up to and including £3,000,000, and 12.5% of that part of the hammer price above £3,000,000”.

Sub-section 2 ‘TAXES’ within Conditions of Sale stated, “The successful bidder is responsible for any applicable tax including any VAT, sales or compensating use tax or equivalent tax wherever such taxes may arise on the hammer price and the buyer’s premium. It is the buyer’s responsibility to ascertain and pay all taxes due. You can find details of how VAT and VAT reclaims are dealt with on the section of the catalogue headed ‘VAT Symbols and Explanation’. VAT charges and refunds depend on the particular circumstances of the buyer so this section, which is not exhaustive, should be used only as a generally guide …”. Page 140 of the catalogue contained the section – ‘VAT SYMBOLS AND EXPLANATION’ – that set out the different scenarios in which VAT might be payable, the percentages payable and the prices to which VAT would be applicable (for example, hammer price, buyer’s premium) in those scenarios. The section included an index of symbols that corresponded to each of the scenarios and which were demarcated on each individual listing if applicable. In most scenarios, VAT would be added to the buyer’s premium. The section also contained further information about whether VAT was refundable in accordance with the circumstances of the buyers (for example, whether they were VAT registered buyers in the UK or in the EU).

We understood that, in this context, the buyers’ premium was a non-optional charge and that not all buyers would pay no VAT or could recover VAT. Based on the information included in the catalogue, we noted that the determination of the amount of buyer’s premium and VAT payable would depend on the circumstances of the successful bidder, and the calculations of which could therefore be complex. We recognised that it would be difficult to present a detailed and in-depth explanation on how those fees and taxes would be calculated in different scenarios in each individual listing within the catalogue. We considered that it was acceptable for Christie’s to present that detailed explanation in a separate section within the catalogue, provided that it was adequately signposted. However, we considered the fact that buyer’s premium and VAT were applicable was material information consumers required to make an informed decision in relation to the auction. We therefore considered that the headline guide prices themselves within individual listings should give an indication that non-optional fees such as the buyer’s premium and the likely percentage charged, any other applicable fees, and the rate of VAT applicable because not all buyers would pay no VAT or could recover VAT, were payable on top of the hammer price. We noted that this had not been the case in the ad.

In addition, we did not consider that the qualification at the bottom of the listing pages – “Other fees apply in addition to the hammer price - see Section D of our Conditions of Sale at the back of this Catalogue” – on its own was sufficient. Notwithstanding Christie’s comments that the font size of the qualification was the same size as the rest of the wording on the same page, we considered that the font size of that text was quite small in relation to the layout of the page. We also noted that there were not indicators, for example asterisks, near the guide prices to direct consumers to the bottom of the page and make them aware that other fees might apply and where they could find more information about those fees. We considered that because of a combination of the lack of a signpost near the guide price to indicate that qualifying information applied, as well as the font size and the position of the qualification, it could easily be overlooked by consumers.

Furthermore, we noted that the three different rates of buyer’s premium set out in the Conditions of Sale on page 138 of the catalogue were exclusive of VAT. Although the subsection concerning taxes, which followed the subsection about the buyer’s premium in the Conditions of Sale, stated that VAT might apply, we considered that reference alone was insufficient. Because not all buyers would pay no VAT or could recover VAT, we considered that the rates of buyer’s premium quoted should have been inclusive of the rate of VAT payable. We noted that this was not the case.

Because the guide prices quoted in the listings did not sufficiently make clear that buyer’s premium and VAT were payable, that detailed information about the calculations of those additional fees and taxes were not adequately signposted in the listings, and the rates of buyer’s premium quoted in the Conditions of Sale were not inclusive of the rate of VAT payable, we considered that the ad was misleading.

The ad breached the CAP Code (Edition 12) rules  3.1 3.1 Marketing communications must not materially mislead or be likely to do so.  and  3.3 3.3 Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the  medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
 (Misleading advertising),  3.17 3.17 Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product featured in the marketing communication.    3.18 3.18 Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT.  Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.  and  3.19 3.19 If a tax, duty, fee or charge cannot be calculated in advance, for example, because it depends on the consumer's circumstances, the marketing communication must make clear that it is excluded from the advertised price and state how it is calculated.  (Prices).

Action

The ad must not appear in its current form again. We told Christie’s to ensure that quoted guide prices in future advertising for auction items or lots made clear that non-optional charges, such as buyer’s premium, any other applicable fees, and the likely rate charged, and applicable taxes such as VAT, were payable on top of the hammer price. We also told Christie’s to ensure that any further detailed information about how those charges and taxes were calculated were adequately signposted, and that quoted prices, such as buyer’s premium, must be inclusive of VAT, if not all of the buyers could recover VAT or pay no VAT.

CAP Code (Edition 12)

3.1     3.17     3.18     3.19     3.3    


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