Regardless of how you promote products and services to consumers, it is critical to ensure that all product packaging, advertising materials and marketing collateral complies with Australian Consumer Law (ACL), explain Ian Rosenfeld, Emma Simpson and Ian Liu.
False and misleading representations not only lead to distrust in your brand and reputation but can also open your business up to substantial penalties from the Australian Competition & Consumer Commission (ACCC) if you have breached the Australian Consumer Law (ACL).
Manufacturers need to be cautious when specifying “country of origin” or “Made in Australia” claims. There are specific requirements under the ACL that must be met to substantiate such claims.
The potential consequences have been demonstrated in a recent case where the ACCC contended that Kimberly-Clark had falsely marketed their products as “Made in Australia” on their website. The items’ packaging correctly stated their country of manufacture.
To ensure your business is compliant, we have provided the key points to consider and broken down the essential facts of the case of ACCC v Kimberley-Clark [2020] FCAFC 107.
Advertising and promotional material cannot make false or misleading claims
The ACL is a national law aimed at protecting consumers and ensuring fair and transparent trading in Australia.
When advertising and promoting products and services, the ACL requires that businesses must not:
- engage in conduct that does or is likely to mislead or deceive; and
- make false or misleading statements.
Businesses risk breaching the ACL if they do not ensure that all promotional materials (including packaging, websites, social media content and brochures) do not create an overall misleading impression about, for example, the quality, style, model, history or the country of origin.
The ACCC is vigilant in monitoring claims made by businesses in their advertising and promotional materials and enforcing the ACL to protect the welfare of consumers and prevent conduct by businesses which could be harmful to consumers.
One claim which has come under scrutiny by the ACCC is “country of origin” or “Made in Australia” claims.
Country of origin claims can include:
– explicit claims that a product was grown, produced, or made in a certain country or place; and
– the use of images, logos and/or words which suggest that a product originated in or from a particular country or place.
Claims or representations made must be accurate and not mislead or deceive consumers. The ACL sets parameters around which such claims can be safely made without raising concerns under the law.
For example, to sustain a representation that goods are the produce of Australia:
(a) Australia must be the country of origin of each significant ingredient or significant component of the goods; and
(b) all, or virtually all, processes involved in the production or manufacture of the goods must happen in Australia.
Case study: ACCC v Kimberley-Clark [2020] FCAFC 107
In 2016, the ACCC instituted proceedings against Kimberley-Clark, alleging it had made false or misleading representations related to “flushable” wipes marketed and supplied in Australia, and that these representations contravened the ACL.
The ACCC’s case contended that Kimberley-Clark breached the ACL by marketing its Kleenex Cottonelle Flushable Cleansing Cloths as “flushable”: that is, the wipes would not cause harm to household and municipal sewerage systems. Although the Federal Court and ultimately the Full Court of the Federal Court dismissed the ACCC’s case related to the “flushable” claims, the parties agreed that Kimberley-Clark had made a false or misleading representation that its wipes were “Made in Australia”, when they were not. The representation was made on the footer of the product website by a “Made in Australia” logo, displayed from late October 2015 to late February 2016. The product’s packaging correctly stated the wipes’ manufacture location.
The maximum penalty for corporations engaging in misleading or deceptive conduct regarding their products is the greater of (a) $10,000,000, (b) three times the value of benefit received, or (c) 10% of annual turnover in the preceding 12 months. In this case, the Federal Court imposed a penalty of $200,000 on Kimberley-Clark for the false or misleading “Made in Australia” representation.
What does this mean for manufacturers?
The penalties imposed by the Federal Court in the Kimberley-Clark decision reminds manufacturers to be aware of and understand their obligations under the ACL when promoting and selling products.
It makes no difference whether a business intends to mislead consumers or not. A representation will be false, misleading, or deceptive if it induces or is capable of inducing error. When the representation is directed to the public, it will be judged according to the impression it leaves on the ordinary or reasonable members of the public. Care and diligence at all times is critical.
Accordingly, manufacturers should:
– review product packaging, websites, social media content and other advertising and promotional materials against the requirements or ACL (particularly country of origin labels) to ensure materials are accurate;
– ensure clear processes are in place for singing off product labelling and advertising materials including ongoing reviews of existing materials;
– provide ACL training to staff.
Manufacturers should also hold their competitors to account for false or misleading claims on their collateral.
Rigby Cooke Lawyers are experienced in advising manufacturers on their obligations under the ACL. If you require advice concerning your obligations, or if you would like assistance reviewing your or a competitor’s marketing materials for compliance, please contact us.
Ian Rosenfeld is Partner, Corporate & Commercial, ph: 03 9321 7850 or IRosenfeld@rigbycooke.com.au. Emma Simpson is Senior Associate, Corporate & Commercial, ph 03 9321 7805 or ESimpson@rigbycooke.com.au. Ian Liu is Lawyer, Corporate & Commercial.