Reasonable Grounds for Representations: ACCC v Dateline Imports Pty Ltd [2015] FCAFC 114
Tuesday 1 September 2015 @ 2.32 p.m. | Trade & Commerce
The Full Federal Court has handed down a judgment in Australian Competition & Consumer Commission v Dateline Imports Pty Ltd [2015] FCAFC 114, which has partially upheld the ACCC’s claims in an appeal from the original Federal Court decision. Cross-appeals by Dateline were also dismissed. The Full Federal Court agreed with the ACCC’s contention that Dateline had contravened section 52 of the Trade Practices Act 1974 (Cth) by not having reasonable grounds for making a series of representations, including that their Keratin Complex formula did not contain formaldehyde and that it complied with worldwide health and safety regulations. The Court dismissed several other grounds of appeal.
ACCC Commissioner Sarah Court said in a press release:
“The ACCC brought these proceedings because it was concerned that consumers and hair salon workers may have been exposed to formaldehyde by using Keratin Complex.
While the appeal has not been fully allowed, it is pleasing that the Full Court has made some further findings in the ACCC’s favour.
Businesses have an obligation to tell consumers the truth about their products, and need to have reasonable grounds to support the truth of these statements, particularly when making claims that a product is free from harmful chemicals. Consumers rely on these representations and do not want to unwittingly expose themselves to unsafe products.”
Case History
As previously reported on TimeBase, in ACCC v Dateline Imports Pty Ltd (No 2) [2014] FCA 1222, Dateline was ordered to pay penalties of $85,000 after Justice Rangiah concluded that Dateline had contravened the Trade Practices Act 1974 (Cth) (“the Act”) by making false or misleading representations regarding the percentage of natural keratin present in its Keratin Complex Smoothing Therapy hair straightening product.
However, the Court also found that another part of ACCC’s claim, that Dateline had made false representations under ss 52 and 53 of the Act, was not sufficiently proven. This claim related to representations from Dateline that their Keratin Complex formula did not contain formaldehyde. The ACCC appealed to the Full Court over the dismissal of these claims.
Dateline cross-appealed against a separate section of the judgment which found that Dateline had contravened the Act by making a representation in a letter that a ban on the sale of their Keratin Complex in Ireland would be overturned.
Decision in the Full Court
The case involved detailed technical and expert testimony about the tests for establishing the presence or likely presence of formaldehyde. The Full Court upheld most of the primary judge’s findings in relation to this technical evidence.
However, the Full Court did uphold some of the ACCC’s grounds of appeal. The Full Court found that even though the ACCC could not prove that Dateline’s representations that their product did not contain formaldehyde or any other dangerous chemicals, Dateline still did not have reasonable grounds to make these representations.
The Full Court also dismissed the cross-appeal, finding that Dateline could not prove there was a reasonable basis for expressing that the Irish ban would be overturned, either as a statement of an opinion or as a statement as to a future fact.
The case was remitted to Rangiah J for determination of any further penalty.
According to the ACCC media release, Dateline Imports withdrew the Keratin Complex product from the market in Australia in November 2010.
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Sources:
Australian Competition & Consumer Commission v Dateline Imports Pty Ltd [2015] FCAFC 114
