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GRC Professional : GRC Summer 2013
15 to a compliance program for the future". He also said the penalty imposed on Cotton On should operate so that it was not in the financial interest of the company or other companies to have ineffectual internal procedures for the purpose of ensuring compliance with relevant safety standards and the Act. "In the present case, infants and children are a significantly vulnerable class of consumers. Standards were enacted to protect them. ... the risk of fire and burning is serious and dangerous. The goods which were the subject of the standard were to be used by children. For those reasons, deterrence (specific and general) must be given significant weight." New Zealand inaction Although the focus of the ACCC was on Cotton On's Australia operations, the same nightdresses and pyjamas at the centre of the Federal Court action were also being sold in New Zealand for seven months before they were recalled, and three months longer than in Australia. Though the recall was advertised in New Zealand by Cotton On, warning that the garments posed a serious "safety risk" to children because of their flammability, New Zealand's Com merce Com mission never investigated the clothing for breaches of its Fair Trading Act, which is similar to Australia's Trade Practices Act. New Zealand and Australia also share similar sta ndards for clothing safety complia nce. According to The New Zealand Herald, a Commerce Commission spokeswoman said there were no customer complaints about the Cotton On garments in New Zealand and as the product were removed from the shelves, the commission's view was that the safety issue had been resolved satisfactorily. New Zealand retailers face fines of up to $200,000 for incor rect fire safety labels. ••• Although Cotton On Clothing offered training relating to advertising, no effective compliance program was implemented by either respondent with regard to safety standards.
GRC Spring 2012
GRC Autumn 2013