The Gatherer 616

12-13 / 30

12|The Gatherer | 13
The ACCC has appealed
the recent Federal
Court decision to order
that the manufacturer
of Nurofen ibuprofen products,
Reckitt Benckiser, pay a penalty
of $1.7 million in respect of
misleading representations
made on the packaging of its
Nurofen specific pain products.
According to ACCC Chair Rod Sims:
The ACCC will submit to the Full Court
of the Federal Court that $1.7 million
in penalties imposed on a company
the size of Reckitt Benckiser does
not act as an adequate deterrent and
might be viewed as simply a cost of
doing business.
This follows a ruling in December
that Reckitt breached the Australian
Consumer Law (ACL) because it
advertised its pain relief products
as specifically treating or targeting
particular types of pain (such as one
product for back aches, and another
for migraines), where in fact:
–– The active ingredient in each
product was identical; and
–– The products did not specifically
target any particular form of pain,
but were equally effective for all
types.
Most importantly, the symptom
specific pain relief products were sold
at almost double the price of other
similar products with the same active
ingredient.
The ruling has significant
consequences for manufacturers and
suppliers of all types of goods which
are marketed as being for a specific
purpose.
ACCC APPEALS FINE OF $1.7
MILLION AWARDED FOR
MISLEADING AND DECEPTIVE
CONDUCT OF NUROFEN
PRODUCTS
The ruling has
significant
consequences for
manufacturers
and suppliers
of all types of
goods which
are marketed
as being for a
specific purpose.
The Misleading
Representations
The Reckitt decision is not surprising
as it applies the law of misleading and
deceptive conduct in a straightforward
manner. Nevertheless it is a good
example of how advertising of
products can contravene the ACL
even if the relevant claims are
“technically true”.
The wording on the packaging was
not technically incorrect. For example,
the migraine specific pain product did
treat migraines and the back ache
specific pain product did treat back
aches. The misleading representation
was instead based on the implication
the consumer would draw from the
way these goods were marketed as a
whole.
The court considered that the
consumer was likely to make two
erroneous assumptions:
–– That each product would solely
treat the type of pain specified
on the packaging and not other
types of pain (and therefore that
it would be necessary to purchase
more than one product to treat
the different types of pain); and
–– That each product was specifically
designed to treat the specified
indications (and was therefore
more effective than ordinary (less
expensive) ibuprofen).
What this means for
manufacturers
Manufacturers should take care when
labelling their products, especially
when products are being marketed for
a specific purpose.
For example, products marketed
as suitable for one use (but, by
implication, not another use) should
actually be formulated for the specified
purpose. Otherwise, the consumer
may be misled into believing that
they need to purchase a separate
product for the other, non-specified
uses. There is a risk of misleading
consumers even if all variations of the
product are sold at the same price.
The Reckitt case demonstrates
that where a single formulation or
composition can be used for multiple
purposes, care should be taken to
at most, provide examples of how
the product can be used, rather
than representing that the product is
specifically formulated for one rather
than another particular use.
Penalties and Enforcement
The $1.7 million penalty ordered
by the Federal Court was based on
the finding that although consumers
would have suffered some financial
loss due to the premium price paid
for the products, the products were
still effective in treating the specified
indications and didn’t cause any
physical harm to consumers. Further
the Court also considered that the
specific amount of profit made by
Reckitt through the use of this
marketing strategy was unquantifiable.
However, consistent with its appeal
pushing for a higher penalty in this
case, the ACCC is advocating for
an increase in maximum penalties
for breaches of the consumer
law on the basis that the current
maximum penalty of $1.1 million
per contravention is an insufficient
deterrent for larger businesses.
Further, the ACCC has stated in
its Compliance and Enforcement
Policy that it will be targeting truth
in advertising as one of its main
priorities, and therefore it is imperative
that manufacturers obtain proper
advice before engaging in marketing
activities, and finalising product labels.