The assistance of Amy Cowper, Solicitor in writing this article is appreciated.
1. Ribena Case
Early last year, GlaxoSmithKline ("GSK"), the manufacturer and supplier of Ribena, the popular blackcurrant fruit drink, was fined NZ$227,500 and ordered by the Auckland District Court to run a corrective advertising campaign.
The charges had been brought by the New Zealand Commerce Commission following a report conducted by two 14-year-old girls as a high school experiment which concluded that 100ml packs of Ribena contained approximately 22mg of vitamin C – substantially less than that stated on the packaging and advertising materials.
GSK's advertisements claimed "the blackcurrants in Ribena have four times the vitamin C of oranges". The Auckland District Court accepted the submission of the New Zealand Commerce Commission that, although blackcurrants have more vitamin C than oranges, the same was not true of Ribena. It accepted the testing results of the New Zealand Commerce Commission that ready-to-drink Ribena contained no detectable level of Vitamin C.
Following the charges brought by the New Zealand Commerce Commission, GlaxoSmithKline Australia Pty Limited ("GSK Australia") the importer and supplier of Ribena products in Australia, reported their conduct to Australia's consumer watchdog, the Australian Consumer & Competition Commission (the "ACCC").
GSK Australia informed the ACCC that the vitamin content claims relating to Ribena may have misled consumers. In particular:
- information contained on the nutritional information panel of Ribena Ready to Drink fruit drinks was incorrect, namely that the quantity of Vitamin C listed was overstated; and
- statements made in relation to Ribena fruit drinks that "the blackcurrants in Ribena contain four times the Vitamin C of oranges", essentially implying that Ribena fruit drinks had 4 times the amount of Vitamin C contained in orange juice products, were incorrect.
GSK Australia gave several court enforceable undertakings to the ACCC, namely, that:
- claims would only be made if they could be substantiated by valid testing; and
- claims which suggested that Ribena products contain four times the amount of Vitamin C than comparable orange juice products would no longer be made.
2. Misleading Claims Under Australian Law
Australian manufacturers and advertisers should take considerable efforts to ensure that all product packaging and general advertising comply with the Trade Practices Act 1974 (Cth) (the "TPA").
Part V of the TPA prohibits the making of misleading and deceptive claims and false representations in relation to goods and services.
Specifically, section 52 of the Act provides that a corporation shall not engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Generally, conduct will be misleading or deceptive if it induces or is capable of inducing error or sends a message that creates or would create the wrong impression in the minds of consumers. In determining whether certain conduct is misleading or deceptive, courts have adopted an objective approach which examines whether a reasonable person in the class of consumers targeted would be led into an erroneous understanding of the product in question.
Whether there is an intention to mislead or deceive is irrelevant. The most important consideration is whether there is a likelihood to mislead the 'reasonable' consumer.
Section 53 of the Act prohibits specific categories of false representations which often exist in conduct that is misleading and deceptive.
For example, corporations must not falsely represent that their products have:
- a particular standard, quality, value, grade, composition, style, model; or
- performance characteristics or benefits;
which they do not have.
Both the overstatement in materials relating to Ribena of the quantity of Vitamin C contained in the product and the implication that Ribena contains four times more Vitamin C than oranges are classic examples of the categories of false representation covered by section 53.
The consequences of contraventions of Section 52 and Section 53 are serious, namely:
- a breach of Section 52 may be restrained by injunction and is actionable in damages if it can be shown that an affected party has relied on the conduct and, as a result, has suffered loss; and
- conduct prohibited under Section 53 constitutes an offence and gives rise to similar risk of liability in respect of claims brought by affected parties.
The ACCC is entitled to prosecute offences under the TPA, including contraventions of section 53. Corporations may be liable to fines of up to $1,100,000 if found in breach.
3. Tips For Manufacturers And Suppliers Of Goods
Courts are aware that exaggeration (generally referred to as puffery) is inherent in advertising and consumers are generally aware of the practice. Puffery is viewed as acceptable conduct: the danger arises where representations are not clearly and obviously discernable as exaggeration (or puffery) and would, in effect, cause 'reasonable' consumers to rely on the relevant information.
Manufacturers/suppliers must balance competing interests inherent in the marketing of new products, namely:
- the enthusiasm of advertisers to place the product in the most favourable and striking light; and
- the law relating to the making of false, misleading or deceptive claims.
Accordingly, manufacturers and advertisers of consumer goods must exercise caution and consider whether a reasonable consumer would be mislead by the information presented, either on the product itself, or in the course of advertising the product.
Where advertising or promoting products by reference to specific product attributes, manufacturers, suppliers and advertisers should ensure the following:
Substantiation of claims
Certain product attributes cannot be easily measured or substantiated: that information should not be included on the packaging of products.
Where information can be measured and tested, it should be clearly stated in relevant quantities. If the relevant attributes are subject to any material qualifications, those qualifications should be stated.
Manufacturers and suppliers must be able to substantiate claims with valid evidence before representing that a certain product exhibits those attributes. Graeme Samuel, chairman of the ACCC has stated, in relation to food and beverage products:
"it is extremely important that companies use appropriate calculation methods when making claims about the contents of food and beverage products, especially when those claims relate to nutrition."
This principle applies to all categories of goods.
Avoid Half Truths and Review Comparative Advertising
- Manufacturers and advertisers need to take caution when comparing two products. Comparative claims must be substantiated.
- When undertaking comparative advertising, sufficient information must be communicated to enable a fair comparison of products to be made.
- A half truth may be misleading or deceptive, particularly if there is an omission of material which is required to make the comparison fair. In general terms, where an ambiguous statement is made (i.e. the statement has 2 possible explanations), the ambiguity will be construed in the manner less favourable to the party making the claim. For example, the assertion that the blackcurrants contained in Ribena have four times the amount of Vitamin C than oranges may in fact be true; however, the same cannot be said in respect of Ribena and/or its ingredients.
- Consider the target audience to ascertain whether attempts to qualify any claim (e.g. fine print and disclaimers, omissions, images and pictures) are legally effective.
Other Compliance Measures
Check specific product information standards that apply, such as the Food Standards of Australia and New Zealand ("FSANZ") (food industry), the Therapeutic Goods Act 1989 (Cth) (the "TGA") (therapeutic goods), the Trade Practices (Consumer Product Information Standards) (Cosmetics) Regulations 1991 (the labelling of cosmetics & toiletries) as well as other relevant Australian/New Zealand Standards (e.g. Textiles – Care Labelling standards for clothing).
The Ribena case serves as an important reminder to manufacturers and advertisers of the importance of exercising caution in making claims about products, in both general advertising and in product labelling and packaging. It is important to consider the factual correctness, the context of and overall impression given by such claims, including the target audience. The fine and corrective advertising measures imposed on GSK indicate the seriousness with which the Courts will view breaches of the TPA.
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.