Misleading labelling causes a consumer law headache for Nurofen

The manufacturer of painkiller label Nurofen has misled customers by falsely claiming that its products target different types of pain.

Nurofen has been selling a range of products that purportedly targeted different types of pain, including back pain, tension headache pain, period pain and migraines.

In fact, its products contain the same active ingredient: 342 milligrams of ibuprofen lysine.

Reckitt Benckiser cooperated with the Australian Competition and Consumer Commission (ACCC) after conceding that none of its Nurofen range of products were better at treating one type of pain than another.

ACCC chairman Rod Sim pointed out that Nurofen was being sold at almost double the price of its rivals’ products and noted the potential risk that the misleading labelling presented.

“It’s conceivable someone could exceed the daily dose by looking at a pack of Nurofen Back Pain and taking that in accordance with what they should, and doing the same with Nurofen Tension Headache and thereby overdosing,” he said.

A spokeswoman denied the company intended to mislead. “The Nurofen specific-pain range was launched with an intention to help consumers navigate their pain relief options, particularly within the grocery environment when there is no healthcare professional to assist decision-making,” Montse Pena said.

Nurofen has 12 months to stop selling its mislabelled ‘specific pain’ range products in their current form. The company faces a fine of up to AUD$1.1 million per breach.

Source: AFR

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Fisher & Paykel fined $200,000 for misleading and deceptive conduct

Appliance company Fisher & Paykel and its warranty provider, Domestic & General, have each been ordered to pay $200,000 for misleading and deceptive conduct involving extended warranties.

The Federal Court of Australia found Fisher & Paykel misled and deceived their customers into thinking they were had to purchase an extended warranty in order to protect their products from repair costs. Under Australian consumer law, customers can seek repairs, replacements or refunds, even after the manufacturer’s warranty has expired, if the product is of unacceptable quality or is affected by a “major failure”.

Customers who had purchased a dishwasher with a two-year warranty received letters from Fisher & Paykel stating that “your dishwasher is now a year old, which means you have 12 months remaining – after that your appliance won’t be protected against repair costs. Fisher & Paykel can help.” The letter then offered the option to purchase an extended two-year warranty in addition to the original warranty. According to the ACCC, 48,214 letters were sent out.

The Court found it was not enough for the letter to note that customers were “entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss damage” since this was “in relatively fine print” on the back page of the letter.

After the legal proceedings commenced against the two companies, all 1326 consumers who bought the extended warranties were contacted and offered a full refund. However, only 107 actually claimed a full refund.
Justice Wigney of the Federal Court also ordered the two companies to pay $15,000 in costs.

Source: Sydney Morning Herald

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Bearings manufacturer fined $3m for price fixing

price fixing

Bearings manufacturer NSK Australia has been fined AUD$3 million for price fixing.

The Federal Court imposed the fine after the Australian Competition and Consumer Commission (ACCC) investigated the case.

NSK Australia holds around 10-13% of the $400 million Australia bearings market. Bearings are an essential component in mechanical items, including motor vehicles, mining conveyors, household electrical items and farm machinery.

According to the ACCC, bearings prices were hiked by four per cent in May 2008 and by 10 per cent in February 2009. The price fixing activity primarily affected aftermarket bearings customers – those who purchased bearings for maintenance and repair of motor vehicles, household and industrial machinery.

How it happened
Three senior Japanese executives from NSK Australia, Nachi Australia and Koyo Australia participated in the cartel conduct. They held regular group meetings in Sydney and Melbourne to discuss pricing plans during the nineties. This led to the formation of the Southern Cross Association cartel in 2000. The cartel remained undiscovered for over a decade.

“Cartels cheat customers and other businesses. The ACCC will continue to tackle cartel conduct with the full force of the law,” ACCC Chairman Rod Sims said.

Although the fine imposed on NSK Australia is significant, it reflects a discount that was granted after it cooperated with the ACCC’s investigation. Koyo Australia also faced a $2 million penalty in October last year. Nachi is yet to receive any penalties apart from significant reputational damage.

The Court also ordered NSK Australia to implement a competition and consumer law compliance training program throughout its organisation.

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Source: ACCC, $3 million penalty for bearings cartel conduct