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The recent Federal Court decisions in ACCC v Halkalia Pty
Ltd [2012] FCA 534 and ACCC v Halkalia Pty Ltd (No 2)
[2012] FCA 535 demonstrate that the ACCC will use all its
powers to take prompt actions against persons that breach the
Australian Consumer Law, including obtaining orders
against individuals.
Basic Facts
Mr Lauren Hann and Ms Vicki Lowe were directors of three
companies that engaged in various misleading and deceptive conduct
within the meaning of the Trade Practices Act 1974 (Cth)
(now Competition and Consumer Act 2010 (Cth)) between 2007
and 2010.
During that period, the companies sold distributorships of
certain "Heartlink" branded household cleaning products
claiming potential earnings of $900-$1600 for 3-4 days of work per
week while actual earnings were much lower than claimed. The
Federal Court found that the companies had no reasonable grounds
for making such a claim.
The Federal Court also found that Mr Hann was knowingly
concerned in and a party to, or aided and abetted, counselled or
procured, the companies' breaches of the law and that he also
made false or misleading representations concerning the
profitability of the distributorships.
Penalties Imposed
Severe penalties were imposed. As a result Mr Hann is:
restrained for 15 years from carrying on businesses or
supplying goods or services in connection with which:
people are invited to invest money or perform work;
any claim is made that moneys or profits earned by the sale of
goods are donated to charity; or
goods or services concerned are or include household cleaning
products;
disqualified for 15 years from managing a corporation; and
ordered to pay a civil penalty of $450,000.
Similar injunctions are imposed on the three companies that were
found to have engaged in misleading and deceptive conduct and one
of the three companies was also ordered to pay a civil penalty of
$450,000.
Ms Lowe is, by consent orders, restrained for 7 years from
making representations that a particular business activity would or
might generate a particular level of earnings or that a reasonable
basis existed for potential purchasers to harbour a particular
expectation as to projected earnings, unless there were reasonable
grounds for the making of such representation.
Implications for Directors and Business Owners
Business owners should be aware as a result of the
Halkalia decisions that in addition to the court's
power to ban company directors from managing corporations under the
Corporations Act 2001 (Cth) which is normally sought by
the ASIC, the ACCC also has the power to seek the same order under
the Competition and Consumer Act 2010 (Cth). The ACCC has
shown that it will pursue such an order where circumstances warrant
and not just the usual civil penalty sanctions.
It should be noted that after enforcement action commenced in
2010 the penalty was imposed in 2012, a far shorter timeframe than
many similar ASIC actions have taken
If you require more information, please contact us.
Holding Redlich has expertise in advising businesses and
companies in relation to the Competition and Consumer Act
2010 (Cth) and would be pleased to assist with any concerns that
you may have.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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