This is the second in a monthly series detailing developments in competition and consumer law in Australia, including the activities of Australia’s competition and consumer regulator, the Australian Competition and Consumer Commission (ACCC), published judgments, recently issued proceedings and any relevant changes in the law.
The June 2019 update is available here.
Woolworth’s “biodegradable“ claims held to not be false or misleading
In ACCC v Woolworths Ltd  FCA 1039, Mortimer J dismissed the ACCC’s claims that Woolworths misled consumers regarding its “Select Eco” disposable picnic products. Woolworths advertised the products as “biodegradable and compostable”, as shown here:
The ACCC argued that these words represented that the products would decompose in landfills or domestic composting “within a reasonable time” when Woolworths had no basis for making these claims. However, Justice Mortimer considered that these words did not amount to a future representation that the products would break down in a “reasonable time”, but merely that the products were inherently capable of biodegrading. The ACCC accepted that the products were capable of biodegrading. Accordingly, her Honour held that Woolworth’s representations were not misleading or deceptive.
The ACCC has appealed this decision. Find the media release on the appeal here.
Samsung sued over “water resistant” claims in advertising its Galaxy phones
The ACCC has commenced proceedings against Samsung alleging that it engaged in misleading and deceptive conduct and made false representations in advertisements for its Galaxy line of smartphones. The ACCC claims that, since around February 2016, Samsung has advertised that its Galaxy phones are water resistant and depicted the phones being used in oceans and swimming pools, an example of which is shown below:
The ACCC claims that the ads are misleading because Galaxy phones are not suitable for use in anything other than fresh water. The ACCC alleges that Samsung had no reasonable basis on which to make these representations, because it did not undertake sufficient testing to determine the water resistance of Galaxy phones, and knew that the phones could be damaged by exposure to anything other than fresh water. Find the ACCC media release here.
ACCC appeals “flushable“ wipes decision
The ACCC has appealed the Federal Court’s decision that Kimberly-Clark’s use of the word “flushable” on its toilet wipes is not misleading. This decision was detailed in the previous June 2019 Consumer Law Update. ACCC Chair Rod Sims has stated that the ACCC’s arguments on appeal will be that:
- “Kimberly-Clark’s flushable claims should have been found to be misleading because there was evidence of the risk of harm these wipes posed to the sewerage system”;
- “The trial judge was wrong to require evidence that these particular wipes had caused actual harm”; and
- “The Court made an error by rejecting the ACCC’s case that Kimberly-Clark had claimed the Kleenex Wipes would break up quickly like toilet paper when flushed”.
Find the ACCC media release here.
ACCC issues proceedings against debt collection agency Panthera
The ACCC has issued proceedings against the debt collection company Panthera, alleging that it unduly harassed consumers by pursuing them for payments of debts, despite knowing that the consumers were not liable for the debts. The ACCC is alleging that Panthera’s conduct breached the Australian Consumer Law or, in the alternative (and relying on the ACCC’s delegated power from ASIC), the Australian Securities and Investment Commission Act, which will apply if the court finds that Panthera’s conduct involved a financial service. Find the ACCC media release here.
LEGISLATIVE AND OTHER DEVELOPMENTS
Uber Eats to amend contracts with restaurants following ACCC investigation
Following an investigation by the ACCC, Uber Eats has agreed to modify the refund rights in its contracts with restaurants. The food delivery company’s current contracts give it the right to refund customers for undelivered orders and detract this refund from the restaurant’s earnings, even though restaurants have no control over the delivery of orders once the food leaves their premises. The ACCC considered these terms were unfair and therefore liable to be void and unenforceable under the unfair contracts provisions of the Australian Consumer Law.
Under the new contracts, restaurants will only be responsible for refunds caused by matters within their control, such as incorrect items. Uber Eats has committed to implementing the changes by December 2019 and will not enforce the current unfair refund rights in the interim.
The ACCC is calling for legislative change so it can seek penalties and compensation for small businesses where large businesses impose unfair terms. Find the ACCC media release here.
Various companies agree to refund customers affected by misrepresentations
Several companies have agreed to refund consumers for misleading conduct and making false representations, following infringement notices and investigations by the ACCC:
- Dodo has agreed to refund customers up to $360,000, for claims it made that its entry-level NBN plans were “perfect for streaming” when some of these plans only included 10GB of data at the speed of 12Mbps, which was insufficient for high-definition streaming (find the ACCC media release here);
- Vodafone has admitted to making false or misleading representations and agreed to refund customers who were charged fees for digital content which they did not purchase or had purchased unknowingly (find the ACCC media release here); and
- CovaU and (again) Dodo have agreed to refund customers and pay penalties totaling $12,600 and $37,800 respectively for misleading discounts to their energy plans which were judged by reference to higher market offer rates rather than the companies’ standing offer rates, with the result that the actual savings were much less than advertised (find the ACCC media release here).
ACCC’s Digital Platforms Inquiry
The ACCC has released is final report as a result of its Digital Platforms Inquiry. The report looks at the dominance of digital platforms in Australia and makes 23 recommendations for reform, which, broadly speaking address:
- digital platforms’ impact on Australian media businesses and Australian consumers’ access to news;
- promoting competition and avoiding entrenchment of a platform’s market power;
- empowering consumers, including by introducing a general prohibition on unfair commercial practices;
- protecting consumers’ privacy;
- continued scrutiny of digital platforms; and
- regulation and law enforcement of digital platforms to be dealt with by relevant agencies in a complementary way.