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Oil giant’s fuel ads misleading says watchdog

The New Zealand Herald

4:00AM Thursday Dec 18, 2008
Isaac Davison
Shell has taken out advertisements, including in the Herald, to defend itself.

Shell has taken out advertisements, including in the Herald, to defend itself.

The Commerce Commission has charged an oil giant with misleading the public in advertisements promoting a more economical fuel.

But today, Shell New Zealand has hit back at the commission, saying its Fuel Economy Formula advertisements are accurate.

Shell’s offensive is the second time in a week a large company has hit back at the commission.

Air New Zealand on Monday accused it of grandstanding to justify its existence after 13 airlines – including Air NZ – were accused of acting in a cartel to skim up to $600 million from freight customers.

Shell’s Fuel Economy Formula, a fuel additive it claims gives better economy than untreated fuel, went on sale in 2006.

Its advertising campaign said it was “designed to take you further”.

But after a 2 -year investigation, the commission has decided to charge Shell with breaches of the Fair Trading Act.

It says the advertisements were misleading.

Under the act, companies can be fined up to $200,000. It is not known how many charges Shell is facing. 

Spokeswoman Jackie Maitland said the company was disappointed at the commission’s decision, but it was ready to present evidence supporting the formula’s efficiency.

Shell had co-operated with the commission at every stage, and rejected any claims of misleading advertising.

A commission representative declined to comment, saying that the matter was before the courts.

Fuel Economy Formula is an additive to Shell’s Ultra 91 and Ultra Hi 95 petrols.

The company claimed it improved efficiency by preventing the buildup of fuel deposits in car engines and reducing friction. It did not add to the cost of the petrol.

Shell said the treated fuel was 0.98 per cent more economical than untreated fuel. 

Company research suggested that if a car covered 500km on a full tank of untreated petrol, it would go about 505km on petrol containing the additive.

An advertisement in today’s Herald (page A11) would communicate Shell’s commitment to economical fuel, and also deny misleading customers, Ms Maitland said.

It is not the first time Shell has faced criticism of the Formula advertising campaign.

Shell New Zealand defended the additive in June 2006 when rival petrol company BP complained to the Advertising Standards Authority, saying the Shell advertisement was deceptive because it exaggerated the economic benefits of the petrol.

The authority did not uphold the complaint, saying the advertising campaign was accurate and was supported by extensive independent tests.

Fair Go also vindicated the fuel’s efficiency, when it tested two cars filled with $20 of petrol, one untreated fuel and the other with the additive.

The Formula-fuelled car drove 181.5km, and the other car 174.3km. AA, which helped Fair Go with the test, said that by using Fuel Economy Formula a driver would save 0.23 litres per 100km. This result confirmed that Shell’s advertising was accurate.

AA technical advice manager Jack Biddle – who supervised the Fair Go trial – last night told the Herald the exercise merely showed that the additive was “no worse than any fuel and arguably may be better”.

New Zealand Herald Article

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