In December 2015, Justice Edelman of the Federal Court of Australia found that Reckitt Benckiser (Australia) Pty Ltd (Reckitt Benckiser) had breached the Australian Consumer Law (ACL) by engaging in conduct that was misleading and deceptive and false (Nurofen decision).1 The essence of His Honour’s findings was that Reckitt Benckiser had represented, through product packaging and website representations, that its Nurofen Specific Pain Relief products were specifically designed to treat the particular pain symptoms described on the packaging. In fact, however, the products in the range were all made from identical ingredients so that one was just as good as the other in treating any of the pain symptoms called out on the packaging.
On 29 April 2016, Justice Edelman brought down his decision on penalties (Nurofen penalties decision)2, ordering Reckitt Benckiser to pay a civil pecuniary penalty of $1.7 million. This was much closer to the quantum of the penalty proposed by Reckitt Benckiser, i.e. $1.1 million, than that sought by the ACCC, which argued for a penalty of at least $6 million.
What does this mean for you?
- Regulatory approvals are not the end of the story when it comes to assessing compliance with Australian consumer laws
Reckitt Benckiser was found to have breached the ACL through its packaging representations despite the fact that each of the products had been approved by the Therapeutic Goods Administration (TGA) under the Therapeutic Goods Act 1989 (Cth). Reckitt Benckiser had relied heavily on these TGA approvals as a reason for failing to respond to public pressures concerning the marketing of its Nurofen Specific Pain Relief Range products.
Justice Edelman accepted the ACCC’s argument that the regulatory approvals had been given to the products individually, without taking into account the overall impression created by the four products taken as a group. Accordingly, even though the packaging did not, on its face, exceed the approved indications, this was not enough to shield those products from further scrutiny by the court on the question of misleading and deceptive and false practices.
- Make sure that global compliance policies are tailored to meet Australian requirements
A major area in which Reckitt Benckiser appears to have fallen short is in the drafting and implementation of its competition law compliance program. Reckitt Benckiser had comprehensive compliance programs and training systems in place, but, Justice Edelman noted that these did not even refer specifically to the ACL. Global compliance programs need to be tailored to Australian conditions and laws.
- Take notice of what consumer advocacy groups are saying about you in the media
Justice Edelman was critical of Reckitt Benckiser for failing to act on certain criticisms in the public domain concerning the marketing of the Nurofen Specific Pain Relief Range products. He referred to these as “warning bells” and questioned the efficacy of Reckitt Benckiser’s compliance program in light of the company’s failure to act on such clear indications that something was amiss with its marketing strategy.
These “warning bells” included Reckitt Benckiser receiving a CHOICE Shonky Award in 2010 and, in 2013, being featured on ABC’s television show “The Checkout”.
To justify its failure to respond to these criticisms, Reckitt Benckiser alleged it had been unaware of this media coverage. Justice Edelman was not convinced by that argument.
The end of the Nurofen nightmare… or is it?
- Consumer class action launched against Reckitt Benckiser
A class action has been launched against Reckitt Benckiser with a view to securing refunds for any Australian consumers who purchased one of the impugned Nurofen Specific Pain Relief products. If the class action is successful, Reckitt Benckiser could end up having to pay many more millions in compensation. The first hearing of the case took place before Justice Jagot of the Federal Court on 14 April 2016.
- Possibility of further proceedings on the new Nurofen Specific Pain Relief Range packaging
During the course of its submissions on penalties, Reckitt Benckiser relied heavily on the assumption that its new packaging for Nurofen Specific Pain Relief Range products no longer infringed the ACL in order to make the point that its sales and profitability were unlikely to have been affected by the contraventions. That argument was referred to by Justice Edelman as a “high stakes gamble”.
The new Nurofen Specific Pain Relief packaging still contains the description “Fast Targeted Relief from Pain”; it still makes reference to a particular pain condition (e.g. “Nurofen Migraine Pain”); and the products in question still appear to be displayed in close proximity to other products within the range as well as to other products of similar composition but lower price. Despite all this, Reckitt Benckiser seemed confident that its packaging no longer breached the ACL because it has now included the description“also suitable for general pain relief” at the top of the pack.
Justice Edelman, on the other hand, suggested that, “There may still be questions that arise from this packaging”. His Honour also took great care throughout the Nurofen penalty decision to make clear that he was “[making] no finding about whether or not the current packaging involves any contravention of the Australian Consumer Law”.
Whether the ACCC or another plaintiff takes up the thinly veiled offer to commence further proceedings in relation to the new Nurofen Specific Pain Relief packaging remains to be seen.