In the course of doing business, you are not allowed to engage in misleading or deceptive conduct. But what if you utilise your personal expertise and experience to make general comments about your industry – for instance, by publishing an article in a trade magazine, or delivering a public lecture? These sorts of activities are often half-marketing, half-not. So what can and can't you say? And what are the risks involved? The Full Court of the Federal Court recently considered this question in Fletcher v Nextra Australia Pty Ltd.1
Mr Fletcher operated a newsagency, had a 50% stake in a newsagency franchisor called newsXpress Pty Ltd, owned a software company which produced software for newsagents, and also operated the Australian Newsagency Blog, which contained articles and commentary on the industry.
On 27 April 2011, Mr Fletcher published a blog post entitled "Nasty campaign from Nextra misleads newsagents" concerning a flyer created and distributed by Nextra Australia Pty Ltd, the franchisor of the Nextra Group (Flyer).
Nextra Group was a competitor of newsXpress. Nextra Group provided two different franchise services – Nextra, which Mr Fletcher considered to be similar to the service provided by newsXpress, and News Extra, which provided more limited services compared to Nextra.2 The flyer contained testimonials from franchisees who had left their previous franchise arrangements and switched to either of Nextra Group's services.
In his blog post, Mr Fletcher stated, among other things, that the Flyer did not specify whether franchisees who moved to Nextra Group moved to Nextra or News Extra.3 He stated that the Flyer contained "some false and misleading information".4 In the blog post, he also disclosed he was a director of newsXpress.
Nextra sued Mr Fletcher, arguing that the blog post constituted misleading or deceptive conduct in trade and commerce within the meaning of section 18 of the Australian Consumer Law5 due to a number of representations in his blog post, one of which was Mr Fletcher's statement that the Flyer did not specify whether franchisees who moved to Nextra Group moved to Nextra or News Extra (Representation).
Nextra Group was successful before the primary judge. Mr Fletcher appealed to the Full Federal Court on the basis that the primary judge was wrong in finding that Mr Fletcher's publishing of the blog post was conduct "in trade or commerce", and in relation to the findings regarding the statements in the blog post, including the represenation.
WHAT DID THE FULL FEDERAL COURT DECIDE?
The Full Court agreed with the primary judge's finding that the Representation was misleading and deceptive.6
Mr Fletcher argued that his blog post did not amount to conduct in trade or commerce because of, among other things, the following:
- the blog post was "not such as to amount to 'promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers'";7
- "he had a legitimate interest in challenging the content of the Flyer which was wholly separate from his own business interests" and "he had developed a reputation as an authoritative commentator on newsagency issues in Australia";8
- the blog was "not operated as a commercial service, but as a 'forum for discussion, information and debate concerning newsagency issues'";9 and
- the blog post was "'part of an industry publication and to be distinguished from a publication directed solely to his commercial interests'".10
The Full Court found that Mr Fletcher's publishing of the blog post was in trade and commerce. It was held that Mr Fletcher's disclosure that he was a director of newsXpress indicated that Mr Fletcher's attack on the Flyer "should not be regarded as emanating from someone with an independent objective viewpoint, but rather, from a competitor in the same industry who was concerned about his own and other potential franchisees being misled by false statements made by Nextra".11 The Full Court distinguished this case from many of the authorities upon which Mr Fletcher sought to rely, and found that Mr Fletcher "was an active participant in the newspaper franchise industry and intended his conduct to have an impact on trading or commercial activities".12
WHAT ARE THE IMPLICATIONS FOR ME AND MY BUSINESS?
If you run a business and publish articles about the industry in general, it is important to be aware that there is a fine line between general comment and commercial conduct. One of the primary considerations is whether your articles are commercially motivated or not.
The Court's decision should also remind business owners to monitor newspapers, magazines, journals and industry websites to ensure that your brand is not being damaged by the misleading or deceptive conduct of competitors. If the owner of a competitor makes misleading statements about your business you should obtain legal advice to determine what action you can take to prevent, minimise or ameliorate damage to your business.
Lastly, one should not read the Court's decision as an indictment of disclosing a personal interest in any commentary you publish. Whilst Mr Fletcher's disclosure statement was a key factor in the Full Court's finding that the blog post had a commercial character, one cannot escape liability simply by leaving the disclosure statement out. Courts will look to a wide range of factors – the presence of a disclosure statement is only one. Furthermore, if you omit a disclosure statement you risk seriously damaging your credibility as a trusted industry commentator.
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1  FCAFC 52.
2 At paragraph  of the judgment.
3 At paragraph .
4 At paragraph .
5 Schedule 2, Competition and Consumer Act 2010 (Cth)
6 At paragraph -.
7At paragraph .
8 At paragraph .
9 At paragraph .
10 At paragraph .
11 At paragraph .
12 At paragraph .