Ever get that feeling of déjà vu?
Between 2010 and 2018, GSK and Novartis jointly marketed the same standard pain relief gel under two different names: Voltaren Emulgel and Voltaren Osteo Gel. Emulgel was positioned as a standard pain relief product (“For temporary relief of local pain and inflammation”) – whereas Osteo Gel was specifically highlighted to assist osteoarthritis sufferers (“For the temporary relief of local pain and inflammation associated with mild forms of osteoarthritis of the knees and fingers”).
In December 2017, the ACCC took action against GSK and Novartis in the Federal Court. It argued that GSK and Novartis had engaged in false, misleading and deceptive marketing in breach of the Australian Consumer Law (ACL) by representing that Osteo Gel was specifically formulated and more effective than Emulgel in treating osteoarthritis pain and inflammation, when the two products were essentially the same.
Sounding familiar? It should. In 2015 and 2016, the ACCC won major victories in the Federal Court against Reckitt Benckiser for its “Nurofen Specific Pain Relief” campaign. Each product within that range had an identical formulation but was marketed under a different name, each referring to a particular type of pain. This was found to be a false and misleading representation that each product within the range was specially formulated to treat a specific type of pain, when it was not. Reckitt Benckiser was ordered to pay a hefty $6 million pecuniary penalty.
In light of this, you’d probably expect the Voltaren case to be a slam dunk for the ACCC. Indeed, both GSK and Novartis admitted that they had breached the ACL in one version of the Osteo Gel packaging. The penalty hearing for those breaches is currently slated for early 2020. It’s worth noting that the Federal Court has already indicated it is prepared to order pecuniary penalties, seeing as the contraventions occurred as part of a “deliberate and considered marketing strategy”.
However, the Federal Court also considered a subsequent version of the Osteo Gel pack, which GSK had adopted from March 2017. GSK argued that this updated packaging did not breach the ACL. In an interesting twist, the Federal Court ruled in favour of GSK – by a very narrow margin.1
What was GSK’s saving grace?
The updated Osteo Gel packaging involved various changes – the most significant being a prominent new front-of-pack disclaimer “Same effective formula as Voltaren Emulgel”. GSK also improved the visibility of the active ingredient on front-of-pack, being the same as that used in Emulgel.
Having regard to these changes, the Federal Court ruled that GSK had “only just” saved itself from a finding of further contraventions of the ACL.
The decision is a strong reminder of the risks around making differential marketing claims. If you are planning to use such claims, we recommend taking particular care to ensure that the overall impression created by your claims is not false or misleading.
In particular, there is a critical difference between representing that a product is “suitable” for a particular use rather than “specifically formulated” for that use. The latter representation carries a high risk of being misleading or deceptive where the product is in fact a general (i.e. non-specialised) product. As the Federal Court noted, it’s a fine line distinguishing between the two.
- All disclaimers must be clearly worded and prominently displayed Disclaimers are not an automatic “get out of jail free” card. In order to be effective in qualifying a claim, they must be clearly worded, legible and prominent in their font, size and colour. They should be positioned reasonably close to the headline claim. Also, a static disclaimer (e.g. on packaging) may bear more weight than one that is “evanescent” (e.g. in a TVC), as this affects how readily it can be picked up by a reasonable consumer. Here, the use of a particularly explicit and prominent disclaimer on the updated Osteo Gel packaging was enough to save GSK – but only just. The Federal Court was quick to point out that, given how close GSK came to being found liable for further contraventions, “Little lasting comfort is to be obtained from this decision”. So, don’t expect a simple disclaimer to be enough to save an otherwise false or misleading communication.
- Take care around “specialised” product/brand names The ACCC took serious issue with the name “Osteo Gel”, arguing that it contributed strongly to the false and misleading impression that the product was specifically formulated to treat osteoarthritis. The Federal Court agreed that using a product name clearly associated with a particular condition was inherently at high risk of conveying the wrong impression to consumers. Remember, product names and sub-brands are marketing claims as well – they must be capable of substantiation and will contribute heavily towards the overall impression created.
- Step back and consider the overall impression of the full product range When it comes to differential marketing, it is essential to consider the overall impression created not only by an individual product pack – but by the full product range. This is because where products are essentially identical, you must not give the impression that one product is not suitable or otherwise inferior for a particular use, compared to the other. We recommend ensuring that any specific use called out on your “specific use” product pack is also clearly identified on your “general use” product pack. Consider also how design elements such as colour can be used to link products within a sub-brand together, to indicate to consumers the interchangeability of products within that group.
- Innovations in packaging (e.g. specialised cap or nozzle) can help to distinguish a product and may even justify a slight price premium The Osteo Gel product featured a unique triangular cap designed to be easier to open – having clear advantages for a person with osteoarthritis in their hands. The Federal Court considered this a “genuine point of difference” between the two products and noted that the provision of such “ease of use” innovations should not be discouraged – even if they enabled more to be charged for the product. Even so, we recommend keeping any price premium (including premiums suggested through an RRP) for a “specific use” product minimal – particularly where the specific use product and general product are positioned side-by-side on shelf. Price differentials between products which are essentially identical will often be a red flag to consumer rights groups and also the ACCC. Indeed, in relation to both Nurofen and Voltaren, the price premium attached to the so-called specific use products was a key trigger for the ACCC’s investigations.