In the heavy-hitting world of weight loss products, the ACCC is in the race for the long-run, with civil proceedings relating to the SensaSlim franchise system continuing and new criminal charges filed last week.
In the criminal proceedings just commenced, the ACCC alleges that director Michael Boyle knowingly gave false or misleading evidence about his knowledge of fellow-director Peter Foster’s involvement with SensaSlim, during the course of giving evidence under a compulsory section155 notice in 2011.
It appears that Peter Foster’s involvement in weight-loss aids such as SensaSlim may be a common thread causing all sorts of grief for the ACCC, would-be franchisees and consumers. Mr Boyle’s prosecution is the latest in a string of proceedings brought by the ACCC in relation to SensaSlim and its officers:
In April 2014, the Federal Court found that SensaSlim had been misleading and deceptive by not disclosing Peter Foster’s involvement in the Sensaslim franchise. Foster had been masquerading as Peter O’Brien, as the real Peter Foster was banned any involvement in the weight-loss business by a court order in 2005. The Court also concluded that SensaSlim misled franchisees by making false representations about the ‘worldwide clinical trial’ of the SensaSlim Solution and the earning potential of SensaSlim franchises. Judgment on penalty is reserved, with the ACCC seeking pecuniary penalties as well as declarations, injunctions and orders to compensate franchisees. The 2005 contempt order resulted from proceedings in which Foster was censured for resale price maintenance, misleading conduct and eventually contempt in respect of another weight-loss product, TRIMit, another weight-loss aid helping unsuspecting franchisees and consumers lose cash faster than kilos. As we reported in October 2013, Foster was found in contempt of court for breaching that court order banning his involvement in weightless industry, and was sentenced to 3 years imprisonment. Finally, just to “fill out” the picture, the ACCC also instituted two contempt of court proceedings against Peter O’Brien for communications that tended to interfere with the administration of justice, however those charges were later dropped.
But we digress – back to Mr Boyle. A directions hearing is set down for 3 November 2014 and Boyle is, not surprisingly, yet to enter a plea. He faces penalties of up to $3,400 in fines or up to 12 months’ imprisonment if guilty.
In the Draft Report issued by the Competition Policy Review Panel on 22 September 2014, the Panel has recommended that the current sanctions for failing to comply with a section 155 notice be increased, as they are currently inadequate. Read our alert on the Draft Report here.