False and misleading representations – sections 29(1)(a)-(n) ACL

Where a business strays beyond mere “sales puffery” in promoting its goods or services and “crosses the line” in to the realm of deception, depending on the nature of the statements sections 29(1)(a)-(n) of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (ACL) may be able to be used as a sword to hold the errant business to account.  Sections 29(1)(a)-(n) of the ACL contain a wide range of prohibitions relating to representations made about goods or services by businesses as shown below:

Section 29(1)(a)	the standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use of goods;[1]
Section 29(1)(b)	the standard, quality, value or grade of services;
Section 29(1)(c)	that the goods are new;
Section 29(1)(d)	a particular person has agreed to acquire goods or services; or
Section 29(1)(e)	purports to be a testimonial by any person relating to goods or services;
Section 29(1)(f)(i)	a testimonial by any person;
Section 29(1)(f)(ii)	a representation that purports to be such a testimonial;
Section 29(1)(g)	sponsorship, approval, performance characteristics, accessories, uses or benefits; [2]
Section 29(1)(h)	a representation that the person making the representation has a sponsorship, approval or affiliation;
Section 29(1)(i)	a representation with respect to the price of goods or services;
Section 29(1)(j)	the availability of repairs and spare parts for goods;
Section 29(1)(k)	place of origin of goods;
Section 29(1)(l)	representation concerning the need for any goods or services;
Section 29(1)(m)	representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3‑2);
Section 29(1)(n)(i) and (ii)	A representation concerning a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3‑2), and a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law).

What is corrective advertising?

A Court has the power to order corrective advertising pursuant to section 232 of the ACL when it is found that false and misleading statements have been made.  Corrective advertising may be ordered in addition to injunctive relief.  Its purpose to dispel incorrect or false perceptions that may have been formed because of misleading or deceptive statements and alternatively the misleading and deceptive conduct.  In the case of Telstra Corporation Ltd v Singtel Optus Pty Ltd (No 2) [2014] VSC 108, Elliot J ordered corrective advertising and said:

“One of the main purposes of corrective advertising is to educate the public, both consumers and competitors, as to the type of conduct that may contravene the Act.  It is important that corrective advertising does more than merely announce the outcome of a particular case.”

Who has the burden of proof?

The complainant has the burden of proof on the balance of probabilities according to section 258 of ACL where:

“258 Proceedings relating to false, misleading or deceptive conduct or representations

If:

(a) proceedings are brought against a person in respect of section 18, 29(1)(a) or (k) or 151(1)(a) or (k); and

(b) the person seeks to rely on a provision of this Part, or of a regulation made for the purposes of a provision of this Part, in the proceedings;

the person bears an evidential burden in relation to the matters set out in the provision on which the person seeks to rely.”

What statements by businesses have been false or misleading pursuant to section 29?

In the recent case of Native Extracts Pty Ltd v Plant Extracts Pty Ltd [2023] FCA 1265 where Dundas Lawyers acted for the Applicants, it was held that the following statements by Plant Extracts Pty Ltd ACN 161 185 91 (Plant Extracts) and Biologi Pty Ltd ACN 618 697 297 (Biologi) amounted to false or misleading representations in breach of section 29(1)(a) and 29(1)(g) of the ACL.

• Plant Extracts took and modified various certificates of analysis owned by Native Extracts, modified them as to make them look like they had done their own their own independent analytical testing when they had not – contravening section 29(1)(a) the standard, quality, value, grade, composition, of the goods and section 29(1)(g) implying that their goods had certain performance characteristics when in fact they did not, in breach of the ACL.
• Plant Extracts represented that its Finger Lime and Desert Lime extracts contain a compound known as “Byangelicin”.  Stating that Byangelicin improves collagen and elastin production in the skin and is a potent anti-aging active that will reduce the potential of early ageing, when in fact, Byangelicin does not exist (Byangelicin Representation) in breach of section 29(1)(a) of the ACL.
• Plant Extracts displayed on its products the Organic Food Chain (OFC) Logo between 8 July 2016 and May 2018 when in fact it did not hold this certification (commonly referred to as ‘’greenwashing”).  The Court held these statements to be a false and misleading statements in breach of section 29(1)(a) of the ACL.
• Biologi represented to the public they that their products were certified as organic by the Organic Food Chain between 24 April 2017 and December 2018, when in fact they were not certified by the OFC during these times. The Court held these statements to be false and misleading in breach of section 29(1)(a) of the ACL.
• Biologi represented that its Bk Rejuvenating Eye Serum contained Vitamin C when in fact it did not; and also represented that its Bf Hydration Body Serum contained Vitamin C when in fact it did not.  The Court held these statements to be false and misleading in breach of section 29(1)(a) of the ACL (False Vitamin C Representations).
• Biologi false pure plant representations – since 24 April 2017, Biologi had falsely claimed that each of its skincare products: contained only 1 ingredient, contained only pure plant, did not contain any additives, and were not diluted. In fact, all of these statements are untrue.  The Court held these statements to be false and misleading in breach of section 29(1)(a) of the ACL.
• Biologi false only supplier representations since 13 November 2017, Biologi represented that they were the first to develop a method to stabilise natural Vitamin C and that their products were the “only ones in the world to contain” natural Vitamin C.  In fact, the Applicant, Native Extracts, developed such a method as early as 2013 and the Third Applicant, EvoleSk.in Pty Ltd had sold products with natural Vitamin C as early as 2015 (Only Supplier Representation).  The Court held these statements to be false and misleading in breach of section 29(1)(a) of the ACL.
• Biologi represented that its Bf Hydration Body Serum contains Byangelicin, and this compound reduces the appearance of aging, when in fact Byangelicin is not a compound know to science.  Again, the Court held these statements to be false and misleading in breach of section 29(1)(a) of the ACL in addition to section 29(1)(g) of ACL.

Further examples of false and misleading statements in breach of section 29(1) of the ACL

In the case of Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330) there were four (4) representations by Coles which contravened the ACL, including:

• packaging stating “Baked Today, Sold Today”;
• packaging stating “Freshly Baked In-Store”;
• packaging stating both “Baked Today, Sold Today” and “Freshly Baked In-Store”; and
• signage stating, “Freshly Baked” and “Baked Fresh”.

The Court held that making the above statements in circumstances where they were not true amounted to making false and misleading statements in breach of section 29(1)(a) of the ACL.

The case of Native Extracts Pty Ltd v Plant Extracts Pty Ltd [2023] FCA 1265 shows that the prohibition contained in sections 29(1)(a) – (n) of the ACL is open to any aggrieved party and not just the ACCC.  The provisions of this section can be used as a sword to hold errant competitors accountable for their conduct.

Links and further references

Legislation

Competition and Consumer Act 2010 (Cth)

Cases where the Court made orders for corrective notices by corporations

Native Extracts Pty Ltd v Plant Extracts Pty Ltd [2023] FCA 1265

T R & K R Shipton Pty Ltd v Zhao [2022] TASSC 18

Xiamen Huadian Switchgear Co Ltd v Powins Pty Ltd (No 2) [2022] FCA 1458

Samsung Electronics Australia Pty Limited v LG Electronics Australia Pty Limited (No 2) [2015] FCA 477

Cases relating to corrective notices where the ACCC was the applicant

Australian Competition and Consumer Commission v Booktopia Pty Ltd [2023] FCA 194

Australian Competition and Consumer Commission v Employsure Pty Ltd [2023] FCAFC 5

Australian Competition and Consumer Commission v Uber B.V. [2022] FCA 1466 (7 December 2022)

Australian Competition and Consumer Commission v Mercedes-Benz Australia/Pacific Pty Ltd [2022] FCA 1059

Australian Competition and Consumer Commission v Smart Corporation Pty Ltd (No 3) [2021] FCA 347 (15 April 2021)

Australian Competition and Consumer Commission v Service Seeking Pty Ltd [2020] FCA 1040

Australian Competition and Consumer Commission v Derodi Pty Ltd [2016] FCA 365

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited (No 2) [2014] FCA 1022

Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74

Australian Competition & Consumer Commission v Markus Australia Pty Ltd [2011] FCA 695

Further information about false and misleading statements

If you need advice on false and misleading statements made by competitors that are affecting your business, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Native Extracts Pty Ltd v Plant Extracts Pty Ltd [2023] FCA 1265 at paragraph 4(d) and paragraph 11.

[2] Native Extracts Pty Ltd v Plant Extracts Pty Ltd [2023] FCA 1265 at paragraph 5.

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