In December 2016, the Federal Court fined the manufacturers of Nurofen, Reckitt Benckiser (Australia) Pty Ltd (Reckitt Benckiser), $6 million for misleading their customers about their painkiller range after the ACCC appealed the Court’s original $1.7 million penalty. Below, we explain the decision as well as provide some practical guidance for businesses about complying with the Australian Consumer Law (ACL).
Facts of the Case
The ACCC successfully brought an action against Reckitt Benckiser in 2015 for engaging in misleading conduct and contravening the ACL. Reckitt Benckiser advertised their painkiller range as formulated to treat specific pain (i.e. back pain, period pain, tension headaches and migraines). But in reality, they were identical and contained the same active ingredient.
The Federal Court fined the pharmaceutical giant $1.7 million. However, the ACCC filed a notice of appeal stating that the penalty was manifestly inadequate and emphasised the need to deter other companies. Relevantly, Nurofen had made substantial profits from selling the products through misleading advertising ($45 million). The Full Federal Court upheld the appeal and ordered Reckitt Benckiser pay a revised penalty.
What is Misleading Conduct?
The ACCC was concerned with Reckitt Benckiser’s misleading advertising practices. A business can engage in misleading advertising when they make statements that are incorrect or likely to create a false impression. In this case, Reckitt Benckiser stated that their product was capable of targeting and alleviating specific types of pain (which it could not do).
Importantly, a business does need to intend to mislead a customer. Rather, it is the overall impression the conduct leaves on a consumer’s mind. Misleading claims can apply to the following:
- quality of a product;
- history of a product;
- whether the product is new;
- consumer’s need for a product or service;
- availability of a service;
- exclusions on goods and services;
- performance characteristics of a product; and
- benefits of using a product or service.
What Can I Do If a Business Has Misled Me?
If a business has engaged in misleading conduct, you can lodge a complaint with the ACCC. The regulator has a wide variety of powers which it can enforce against a business including fines, injunctions and enforceable undertakings. The process for submitting a complaint typically follows these three steps:
- contact the business to explain the problem and the outcome that you want to try and achieve;
- contact the ACCC and make a complaint; and
- take legal action independently to small claims court or tribunal.
How Can Your Business Comply With the Consumer Law?
It’s important to remember that the prohibition against misleading and deceptive conduct extends beyond advertising, and applies to:
- product packaging;
- testimonials on your social media pages;
- representations on your website;
- online shopping services; and
- information provided by your staff.
This means that you need to keep consumer law front of mind when advertising and marketing your product as well as designing your product packaging. It’s also prudent to include warranties and limitations of liability in your business terms and conditions when selling goods and services.
The ACCC does not take kindly to brand’s who engage in misleading advertising, as illustrated by the Court’s recent decision to order a revised penalty against Reckitt Benckiser. If you have any questions about your advertisements or need assistance reviewing your ads to ensure they comply with the ACL, get in touch with our consumer lawyers on 1300 544 755.