Pecuniary penalties for misleading and deceptive conduct and false country of origin claims imposed
Australian Competition and Consumer Commission v P & N Pty Ltd  FCA 6
The Federal Court has imposed pecuniary penalties, ordered injunctions, publication orders and made declarations concerning breaches of the Australian Consumer Law by P & N Pty Ltd and other related companies.
On 3 May 2013, the ACCC commenced proceedings against the companies behind two solar panel supply businesses – “Euro Solar” and “Australian Solar Panel” and an individual, Nick Patel, for breaches of the Australian Consumer Law (ACL).1
The ownership structure of each of those businesses, which sets out the companies the subject of the proceedings, is set out below:
P & N, P & N NSW, Worldwide Energy and Nick Patel did not contest the allegations made against them by the ACCC, therefore this decision focuses on the form of the orders to be made, rather than the liability of the parties.
By a statement of agreed facts, it was admitted that:
- Between November 2012 and May 2013, P & N and P & N NSW had published advertising or promotional materials, in newspapers and on television, on YouTube and through the website www.eurosolar.com.au, which included the words “Australian solar panel/s” and/or a logo which prominently included the words “Australian Solar Panel” and an image of a map of Australia formed by rays of sunshine. The logo is set out below:
- From January 2013, Worldwide Energy had published advertising and promotional materials, through the website www.australiansolarpanel.com., which had included the words “Australian solar panel/s” and/or the logo set out above.
- From May 2012 to February 2013, P & N and P & N NSW published video testimonials on YouTube and the Euro Solar website that were purported to be given by customers of Euro Solar.
- From January 2013 to February 2013, Worldwide Energy published written testimonials on the Australian Solar Panel website which were purportedly given by Australian Solar Panel customers.
- Mr Patel was knowingly concerned in, or a party to the above contraventions.
False, misleading and deceptive representations as to country of origin and testimonials by P & N, P & N NSW and Worldwide Energy
The ACCC alleged that as a result of this conduct, P & N, P & N NSW and Worldwide Energy had made representations that the solar panels were made in Australia and these representations were false, misleading or deceptive, or likely to mislead or deceive because the solar panels were in fact made in China. In addition, the ACCC alleged that the video and written testimonials were false, misleading or deceptive or likely to mislead or deceive because the purported video testimonials were given by actors and, in relation to the written testimonials, Australian Solar Panel did not supply any retail customers and did not have any actual customers such as those represented in the written testimonials. As mentioned, the ACCC’s allegations were uncontested.
The ACCC sought declarations, injunctions, publication orders and pecuniary penalties. After consideration of the actions of P & N, P & N NSW, Worldwide Energy and Nick Patel,2 on 17 January 2014, Justice Besanko granted the relief sought by the ACCC which included making declarations that P & N, P & N NSW, Worldwide Energy and Nick Patel had contravened the ACL. His Honour also ordered that:
- P & N, P & N NSW, Worldwide Energy and Nick Patel be restrained for a period of 3 years from making representations that solar panels are made in Australia, when they are not or representations that purport to be a testimonial by any person, when they are not;
- P & N and P & N NSW jointly publish in various newspapers and on the Euro Solar website a corrective notice outlining the ACL contraventions and the court’s findings;
- P & N and P & N NSW each pay a pecuniary penalty of $50,000, Worldwide Energy pay a pecuniary penalty of $25,000 and Nick Patel pay a pecuniary penalty of $20,000; and
- P & N, P & N NSW, Worldwide Energy and Nick Patel pay $10,000 towards the ACCC’s costs.
The ACCC and recent contraventions of the Australian Consumer Law
In 2013, the ACCC made a commitment to target false credence claims and this was reiterated in 2014. This commitment resulted in proceedings against Coles for its supply of bread and use of the “Baked Today, Sold Today” slogan when in fact the bread was partially baked and frozen off site and then ‘finished’ in store by Coles. In 2013, Pepe’s Ducks was also ordered by the Federal Court to pay $375,000 in pecuniary penalties after the ACCC commenced proceedings against it for false, misleading and deceptive conduct in its use of the phrases “open range” and “grown nature’s way” for its duck meat products when in actual fact the ducks were raised in barns and not allowed to spend any time outside.
Whilst the admissions in the P & N case meant that the origin of the solar panels was never in question, the case is yet another example of businesses breaching the Act by promoting their goods by misrepresenting the origin of those goods. The Act sets out detailed requirements which must be met for country of origin claims to be made. These requirements cover “Made in…”, “Produce of…” and “Grown in…” claims and businesses seeking to make place of origin claims must comply with those requirements.
Reduce the risk of breaching the Australian Consumer Law
The above cases and the P & N case highlight the importance of businesses being aware of their ACL and Competition and Consumer Act responsibilities generally and the need to promptly and comprehensively address any concerns of non-compliance raised by the ACCC or others. In order to reduce the risk of breaching the Act, businesses should establish and implement compliance policies and programs. The existence or non-existence of these is a factor taken into account by the Court in assessing penalties in any particular case.
- The ACL is contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth).
- Including consideration of matters such as the length, deliberateness and flagrancy of the contraventions by the parties, the fact that none of the parties had previously been found to have contravened the ACL (or the Trade Practices Act), the parties’ cooperation with the ACCC and the size and financial position of the parties.