A LTL 23.3 FINE FOR A MISLEADING ADVERTISING OF AN APARTMENT

03 12 2009

The Competition Council resolved to recognise to constitute an instance of misleading advertising the statement posted in the website of UAB Oslit, on ww.oslit.lt, claiming “A three-unit 9-storey residential building under construction” and “total 208 apartments designed”.  UAB Oslit was obligated by the Competition Council to discontinue the use of the misleading statements where such actions were still continued. UAB Oslit wassubjected for the use of misleading advertising to a fine of LTL 23,300.

The Competition Council initiated the investigation on the basis of a consumer complaint referred to the Council by the State Consumer Rights Protection Authority.  The complainant indicated that the advertising statement posted in the website www.oslit.lt advertising the project “Karoliukai” claimed: “A three-unit 9 storey residential house under construction”, “total 208 apartments”, “Two and three-rooms apartments of 44 to 83 sq.m. for sale in the newly constructed 9 storey residential house “Karoliniškių Karoliukai”. On the basis of this advertisement the complainant was reasonably expecting to purchase in the residential house being advertised residential premises at her choice, but instead she was sold the non-residential premises intended for recreation purposes.

The investigation conducted by the Competition Council involved a thorough assessment of all circumstances related to the acquisition of the apartment – the preliminary contract on the purchase and sale of immovable property and the premises purchase-sale contract.  The preliminary contract indicated that the Seller sells and the Buyer buys a 2-room premises that were hereinafter referred to in the contract as an apartment. The contract on the purchase and sale of the premises the object of the purchase is referred to as a “non-residential premises for recreation purposes”.  Besides, the contract specified that the recreation premises are located in a separate building – the Tourism centre, rather than in the residential house as indicated in the advertising statement.

UAB Oslit is engaged in the business of development and marketing of immovable property projects. Based on the criteria of accuracy as defined in the Law on Advertising any claims presented in advertising may be acknowledged false, if the provider of advertising can not substantiate accuracy of the assertion during the time of use. The Competition Council concluded that in the course of the investigation the company failed to present any evidence of the accuracy of its advertising claims. The advertising claims published and circulated by the company, as well as other information posted in the corporate website allowed a presumption that all premises in the building being advertised were buildings of residential purpose, i.e., apartments. Meanwhile, the data provided by the SE Centre of Registers suggest that the building under construction contains 144 non-residential premises and only 81 apartments.  The advertising by UAB Oslit as well as its method of presentation have a capability of affecting the economic behaviour of advertising users seeking to book and purchase apartments offered by the company, as the contents of the advertising claims in no way suggested that the second to the ninth storeys of the house may also contain premises of non-residential purposes. On the basis of the advertising claims published by UAB Oslit any advertising user may reasonably expect to purchase in the house under construction premises of residential purpose.  It is highly probable that being aware of the correct and complete information to the effect that not all apartments in the house will be of residential purpose any advertising user might as well opt for different premises or a different company.

The amount of the fine the Competition Council was established by having considered the aggravating factor in the sense that UAB Oslit impeded the investigation by refusing to furnish to the Competition Council the requested information.

Competition Council Spokesperson