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GRC Professional : GRC Spring 2011
1111 attention to risk areas for misleading advertising. One such risk area, says McLeod, is comparative advertising. “Unfavourably comparing competitor products on quality or price is almost a guarantee that the competitor will take action if the comparison is misleading,” he says. DLA Piper partner Shannon Platt says companies that use comparative advertising need to meet a high bar to comply with misleading and deceptive advertising rules. “You have to make sure you compare apples with apples.” For instance, Platt recently successfully represented leather furniture business Nick Scali in court against another furniture retailer Super-AMart, which had inferred the quality of one of its lounges was similar to a more expensive Nick Scali lounge, urged consumers to compare the price and warned them against paying a higher price at Nick Scali. Nick Scali argued its lounge was better quality. The action was successful because the advertisement falsely led consumers to believe the quality of the two products was similar. “Businesses shouldn’t be tempted to make broad comparative statements in advertisements without first doing their homework, because taking the time to check the facts is much less expensive than going to court,” she says. Corrs Chambers Westgarth partner Richard Flitcroft says the key to mitigating the risk of legal action around misleading advertising is being able to substantiate claims in advertisements. “Part of preparing advertisements should be consideration about how claims made can be backed up by evidence,” he says. Flitcroft suggests preparing a dossier that shows how every representation made in an advertisement can be supported. This is especially important given new powers the ACCC acquired in January 2011 to issue substantiation notices to businesses to provide evidence to back up claims in advertisements. He also advises businesses to be vigilant about the way disclaimers are used in advertisements. “It’s important not to go too far in the small print included in ads. Anything in the disclaimer should not negate the main message in the advertisement, it should only allow for a slight qualification of the main message.” Ultimately, says Clayton Utz’s Chris McLeod, avoiding legal action for misleading and deceptive advertising is all about having direction and commitment from senior people within the business, such as the head of marketing, about the importance of complying with applicable laws. “Develop a culture of compliance and put in place clear procedures to check advertisements for potential breaches of advertising laws to reduce the risk of litigation,” he says. ••• too good to Be tRue? ugg boots not made in Australia Online trader Marksun Australia Pty Ltd has been fined $430,000 for advertising Chinese-made ugg boots as Australian made, including $100,000 for unauthorised use of the Australian-made logo. The ACCC prosecuted Marksun, which promoted the Chinese-made boots using the registered trademark “Marksun Products Ugg Boots from Australia”, the statement “Made in Australia from Australia Wool”, silhouette images of wombats and kangaroos, images of the Australian flag and the Sydney Opera House, and the official green and gold Australian- made logo. Are chickens really ‘free to roam’? The ACCC has instituted proceedings in the Federal Court against Baiada Poultry Pty Ltd and Bartter Enterprises Pty Ltd. The ACCC alleges the chicken companies made false or misleading claims in print advertising and product packaging that Steggles meat chickens are raised in barns with substantial space available allowing them to roam freely. The ACCC alleges that the population density of meat chickens raised in barns preclude such movement. king island claims by meat suppliers The ACCC has instituted legal proceedings in the Federal Court, Melbourne, against two Victorian meat retailers alleging false and misleading representations about meat claimed to originate from King Island, Tasmania. The ACCC alleges that Hooker Meats Pty Ltd, trading as ‘Peninsula Bulk Meats’, misrepresented in newspaper advertisements and on their website that meat they supplied was grown on King Island. Businesses shouldn’t be tempted to make broad comparative statements in advertisements without first doing their homework, because taking the time to check the facts is much less expensive than going to court. RICHARD FLITCROFT Corrs Chambers Westgarth partner
GRC Summer 2012