Increased ACCC activity over Christmas
By Jack Newton, Lawyer, MST Lawyers
There has been a spike in Australian Competition and Consumer Commission (ACCC) activity in the last fortnight – a further sign that the ACCC is taking tougher stances against conduct that contravenes the Competition and Consumer Act 2010 (Cth) (the Act) and the Australian Consumer Law (ACL).
Electrodry franchisor – misleading testimonials
On 18 December 2015, national franchisor Electrodry has been ordered to pay penalties of $215,000 for publishing fake testimonials on various websites.
Electrodry requested its franchisees publish fake testimonials purporting to be customers of the Electrodry Carpet Cleaning franchise on websites such as www.yelp.com.au; www.google.com.au; www.truelocal.com.au; and www.womo.com.au.
There were, therefore, two contraventions – the actual publishing of fake testimonials as well as the inducing of franchisees to publish fake testimonials.
Electrodry went as far as providing sample reviews drafted by the franchisor.
One of the published testimonials was:
Loved it
Nathan from Electrodry came out yesterday to clean the carpet in my house and I’m very impressed with the result. My mother in law recommended we use Electrodry and I must thank her for the recommendation. I’ve had a few other carpet cleaners do the carpet in the last couple of years and none of them did this good a job. Best carpet cleaning job I’ve had in Adelaide.
In addition to the $215,000 penalty, Electrodry was ordered to pay $10,000 of the ACCC’s costs, injuncted from similar conduct and ordered to publish corrective notices in “Business Franchise Australia and New Zealand Magazine”.
Nurofen – specific pain products
On 11 December 2015, Nurofen was found to have engaged in misleading and deceptive conduct over its range of “Specific Pain” products.
Nurofen Back Pain (in a green box), Nurofen Period Pain (in a pink box), Nurofen Migraine Pain (in a purple box) and Nurofen Tension Headache (in a brown box) were all found to contain exactly the same active ingredients, and therefore did not target the relevant pain and is otherwise of exactly the same formula. `
Because of this, each product treated each of the four pains just as well as the other three.
Each product (and the Nurofen website) contained a statement “[relevant product] is fast and effective in the temporary relief of pain associated with [the relevant pain]”.
Nurofen, who did not contest any of the ACCC’s application, has been ordered by consent to stop all shipments and orders within 4 weeks and have all four products removed from all shelves within 3 months and. Nurofen must also publish corrective notices on its website and in The Australian newspaper and enter into a court-ordered Compliance Program.
Advanced Medical Institute – contempt of court
On 17 December 2015, the owner of Advanced Medical Institute has been found guilty of contempt of the Federal Court of Australia, after it contravened the terms of previous orders made against it.
On 22 April 2015, NRM Corporation Pty Ltd and NRM Trading Pty Ltd (together, NRM) had been ordered not to make any statement regarding the efficacy of their oral and nasal treatments (treatments) for premature ejaculation (PE) or erectile dysfunction (ED). This order was made because the Federal Court found that there was no scientific evidence to support the effectiveness of the treatments.
Notwithstanding those orders, NRM then commenced a large television and radio marketing campaign. The campaign included statements such as “Guys, make the call to AMI right now. AMI’s revolutionary oral strips put a stop to [PE].“
As can be seen, it is clear that the above statement relates to the efficacy of the treatments and were, therefore, a contravention of the earlier orders.
The Court found NRM to be in contempt and adjourned the matter for a penalty hearing. The penalties available to the court include fines and imprisonment.
Conclusion
All three of these matters show a willingness of the ACCC to take serious steps to enforce the Act and the ACL.
All business must be aware of their obligations under the Act and the ACL to ensure they are fully compliant.
For more information or discuss your competition and consumer law compliance, please contact our Corporate Advisory team by email corporate@mst.com.au or by telephone +61 3 8540 0200.
