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Reckitt Benckiser feels the pain after $6 million penalty

13 February 2017
Read Time 3 mins reading time

The Federal Court of Australia has ordered Reckitt Benckiser (Australia) Pty Ltd (Reckitt Benckiser), the maker of Nurofen pain medications, to pay a penalty of $6 million following a recent appeal by the Australian Competition and Consumer Commission (ACCC).

In April 2016, the Federal Court imposed a $1.7 million fine on Reckitt Benckiser following the Court’s finding (and Reckitt Benckiser’s eventual admission at trial) that Reckitt Benckiser had engaged in misleading or deceptive conduct under the Australian Consumer Law (ACL). However, on its appeal, the ACCC sought an increase in the penalty to $6 million, on the basis that $1.7 million would not act as a sufficient deterrent to a company the size of Reckitt Benckiser, and that it might be viewed simply as a ‘cost of doing business’.

Reckitt Benckiser had, over a period of nearly five years, represented to consumers on its packaging and on two of its webpages, that it had four different Nurofen pain medications “targeted” to treat four different types of pain (namely, “migraine pain”, “tension headache”, “period pain” and “back pain”). In fact, there was no difference between the four products. Each product contained the same active ingredient (200 mg of ibuprofen) and treated pain in exactly the same way. Further, the “targeted” products were sold at almost double the price of the standard Nurofen product.

When determining the appropriate penalty, the Federal Court noted that the additional revenue Reckitt Benckiser obtained from the sale of the four identical products – compared to the revenue it would have obtained if the same sales had been made of the chemically equivalent standard Nurofen product – was in the order of $25 million over the 5 years during which the relevant sales took place. The Federal Court noted the importance of ensuring that the penalty be a substantial portion of this $25 million amount. Accordingly, the Federal Court stated that the $6 million penalty sought by the ACCC was at the bottom of the appropriate range for the contraventions of the ACL.

This case serves as a reminder for Australian traders (and for traders based overseas that supply goods and services to Australian consumers) to take active steps to ensure compliance with the ACL. As demonstrated above, significant penalties may be imposed on businesses that fail to comply with their obligations under the ACL.

So, when making claims with any scientific reference, it is especially important to make sure the relevant testing has been done and documented, and that the marketing and R&D teams work together to ensure that claims are not made beyond the proven data.

We have seen and helped businesses respond to many ACCC questions about credence and scientific claims in advertising. For further information on how Macpherson Kelley can assist your business in this area, please contact Kelly Dickson or Scott Duke.

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Reckitt Benckiser feels the pain after $6 million penalty

13 February 2017

The Federal Court of Australia has ordered Reckitt Benckiser (Australia) Pty Ltd (Reckitt Benckiser), the maker of Nurofen pain medications, to pay a penalty of $6 million following a recent appeal by the Australian Competition and Consumer Commission (ACCC).

In April 2016, the Federal Court imposed a $1.7 million fine on Reckitt Benckiser following the Court’s finding (and Reckitt Benckiser’s eventual admission at trial) that Reckitt Benckiser had engaged in misleading or deceptive conduct under the Australian Consumer Law (ACL). However, on its appeal, the ACCC sought an increase in the penalty to $6 million, on the basis that $1.7 million would not act as a sufficient deterrent to a company the size of Reckitt Benckiser, and that it might be viewed simply as a ‘cost of doing business’.

Reckitt Benckiser had, over a period of nearly five years, represented to consumers on its packaging and on two of its webpages, that it had four different Nurofen pain medications “targeted” to treat four different types of pain (namely, “migraine pain”, “tension headache”, “period pain” and “back pain”). In fact, there was no difference between the four products. Each product contained the same active ingredient (200 mg of ibuprofen) and treated pain in exactly the same way. Further, the “targeted” products were sold at almost double the price of the standard Nurofen product.

When determining the appropriate penalty, the Federal Court noted that the additional revenue Reckitt Benckiser obtained from the sale of the four identical products – compared to the revenue it would have obtained if the same sales had been made of the chemically equivalent standard Nurofen product – was in the order of $25 million over the 5 years during which the relevant sales took place. The Federal Court noted the importance of ensuring that the penalty be a substantial portion of this $25 million amount. Accordingly, the Federal Court stated that the $6 million penalty sought by the ACCC was at the bottom of the appropriate range for the contraventions of the ACL.

This case serves as a reminder for Australian traders (and for traders based overseas that supply goods and services to Australian consumers) to take active steps to ensure compliance with the ACL. As demonstrated above, significant penalties may be imposed on businesses that fail to comply with their obligations under the ACL.

So, when making claims with any scientific reference, it is especially important to make sure the relevant testing has been done and documented, and that the marketing and R&D teams work together to ensure that claims are not made beyond the proven data.

We have seen and helped businesses respond to many ACCC questions about credence and scientific claims in advertising. For further information on how Macpherson Kelley can assist your business in this area, please contact Kelly Dickson or Scott Duke.