Best Buy Lawsuit Claims ‘Lost Profits’ From Ultimate’s Allegedly Deceptive Ads
Ultimate Electronics’ failure to respond to a Council of Better Business Bureau inquiry provoked Best Buy to sue Ultimate to halt its “systematic campaign of false and misleading advertising,” the Best Buy complaint says. The council’s National Advertising Division announced April 12 that because Ultimate failed to cooperate with its probe, it had referred the case to the FTC. Best Buy filed a complaint at the council Jan. 5.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Best Buy’s lawsuit, filed Friday in U.S. District Court in Minneapolis, alleges Ultimate violated U.S. and Minnesota deceptive trade practices laws. In addition to an injunction forcing Ultimate to scrap the campaign, the complaint seeks treble damages for “lost profits, lost sales, and expenditures for past or future corrective advertising,” it says. For the last two years, Ultimate has mounted “an extensive marketing campaign” in various media and online, “conveying the false and misleading message that consumers who shop at Ultimate will always get the lowest price and that Ultimate’s prices always beat Best Buy’s,” the complaint says. “Ultimate’s claims are literally false because Ultimate’s prices are frequently higher than Best Buy’s prices for the same items.” Ultimate didn’t respond to requests for comment.
Ultimate’s ad campaign is “particularly harmful because it strikes at the heart of competition” in the CE industry, the complaint says. That Ultimate advertises, “We shop the competition so you don’t have to,” coaxes consumers “into surrendering the most effective tool they have to ensure competitive pricing,” comparison-shopping, it says. The campaign “is causing irreparable harm to Best Buy through pecuniary loss, damage to reputation, and loss of goodwill,” it said.
Best Buy in late 2009 ran pricing surveys in markets throughout the U.S., the complaint says. The surveys “confirmed that Ultimate’s prices were frequently higher than Best Buy’s,” and for some products categories were higher “in a majority of instances,” it says. Ultimate’s ad claims also “failed a test” by the Better Business Bureau in Minnesota and North Dakota in 2008, which found that Ultimate had the lowest price on only three of the seven TV models that were price-tested, it says.
Best Buy has contacted Ultimate and demanded that it cease the campaign, but it “has refused to voluntarily” do so, the complaint says. “Ultimate continues to disseminate its false and misleading advertisements willfully, despite its awareness, as its Chairman and CEO Mark Wattles acknowledged, ’that claiming that we always beat your prices and in fact doing it is problematic at best.'” The complaint says Wattles made the statement in a March 15 e-mail to Best Buy CEO Brian Dunn.