Update on regulatory changes in advertising and what’s hot at the ACCC

Norton Rose Fulbright Partner Georgina Hey and Associate Isobel Taylor conclude their two-part series on advertising regulations and trends, with a look at what’s bothering the ACCC and an update on regulatory changes in advertising. 

Part 2: A tale of radical transparency: when regulation catches up with consumer preference

In Part 2 of this series, we take a look at some current areas of focus for the Australian Competition and Consumer Commission (ACCC), and recent regulatory changes advertisers should be aware of in ensuring their review procedures are up to date.

Current hot topics at the ACCC

The ACCC has investigatory powers and can issue infringement notices and commence court action in response to what it considers recurring themes of conduct, matters of public health and safety, or issues of widespread consumer concern. The misleading or deceptive conduct provisions of the ACL are particularly relevant to claims made in advertisements and other representations to consumers. The ACCC always maintains a focus on truth in advertising, with a focus on specific markets that is generally connected with current social concerns. For example, current focus areas include health and wellbeing claims, environmental and organics type claims, and any advertisements aimed at vulnerable consumers such as children.

Recent high-profile ACCC matters in this area include:

• • Truth in advertising – ACCC v Meriton Property Services Pty Ltd:[1] the Court found that Meriton took steps to prevent guests that it suspected may leave an unfavourable review of its properties from receiving an email from TripAdvisor prompting them to leave a review. The Court found this was a deliberate strategy designed to minimise the number of negative reviews of its properties on TripAdvisor, and create a misleadingly positive impression. The Court ordered penalties of $3 million. This decision makes it clear that conduct intentionally designed to undermine the integrity of third party review processes can constitute misleading or deceptive conduct, even though Meriton itself was not responsible for the content ultimately published.
  • Vulnerable consumers and general health and wellbeing claims – ACCC v H.J. Heinz Company Australia Limited:[2] the Court found that Heinz’s statements of “99% fruit and veg”, images of fruits and vegetables, and claims about “nutritious food”, gave the impression that their Shredz products were beneficial to children’s health. In fact, the products were made from fruit and vegetable paste and contained around two-thirds sugar. The Court ordered penalties of $2.25 million. Given Australia’s childhood obesity crisis, expect the ACCC to continue to closely monitor health and nutrition claims on food and beverages and advertisements aimed predominantly at children.
  • Environmental claims – Australian Competition and Consumer Commission v Pental Limited:[3] the ACCC instituted proceedings against Pental following a complaint made to the ACCC by the consumer advocate group Choice. Pental cooperated with the ACCC in admitting that its claims about its bathroom cleaning wipes being “flushable” and “degradable” and disintegrating “just like toilet paper” were suitable to be flushed when that was not the case, and was ordered to pay $700,000 in penalties.
  • Environmental and organics claims – Infringement notices issued to Dreamz Pty Ltd, trading as GAIA Skin Naturals: the ACCC issued infringement notices regarding alleged false or misleading representations in relation to the use of the words “pure”, “natural” and “organic” on its baby bath and body wash, shampoo and moisturiser, when in fact its products contained two synthetic chemical preservatives. GAIA paid $37,800 in penalties.
  • Environmental claims – Ongoing Federal Court proceedings against Woolworths: the ACCC is currently engaged in Court proceedings against Woolworths in relation to its claims about “biodegradable” and “compostable” disposable crockery and cutlery sets. The ACCC is alleging that Woolworths failed to make reasonable or adequate efforts to substantiate the representations made to consumers about the biodegradability and compostability of its products. These proceedings underscore the importance of having accurate and up-to-date data about any claims made in advertisements or on packaging. Even if a claim is true, you must be able to objectively demonstrate that this is the case.

With the introduction of the ACCC Social Media Guidelines in 2017, and the compulsory introduction of the Country of Origin food labelling requirements and a new National Information Standard for free range eggs earlier this year, these are also expected to be areas of continued ACCC focus.

Recent regulatory changes to be aware of

Advertisers should also keep abreast of any regulatory changes affecting their industry. Recent regulatory changes to bear in mind include:

• • The updated Therapeutic Goods Advertising Code (which has the force of law per the Therapeutic Goods Act 1989 (Cth)) comes into effect on 1 January 2019. This will implement various changes generally aimed at providing more objective tests to determine violations of the Code. A widened definition of “advertise” in both the Act and the Code has also recently come into force, now capturing the indirect promotion of the use and supply of therapeutic goods. This amendment was intended to ensure that the definition encompasses new forms of advertising such as social media.
  • As noted above, the new Country of Origin Food Labelling Information Standard became mandatory on 1 July 2018. The new label formats can also be used in promotional and advertising material, provided that this information is consistent with the label on the product, the labels are always associated with the relevant products and a single label is only used for a group of products if they share the same percentage of Australian ingredients.
  • The AANA Code of Ethics recently amended its provisions relating to the use of sexual appeal in advertisements. The relevant section has been amended to prohibit advertising portraying adults that uses sexual appeal in a manner that is either exploitative or degrading. The definition of exploitative has also been widened to mean “taking advantage of the sexual appeal of a person, or group of people, by depicting them as commodities; or focussing on their body parts where this bears no relevance to the product or service being advertised”. Previously, a consumer could not bring a complaint on the basis of an exploitative depiction alone, and this was more narrowly defined as “clearly appearing to purposefully debase or abuse a person, or group of persons, for the enjoyment of others, and lacking moral, artistic or other values.”

Takeaways

With the number and complexity of legal and regulatory requirements to comply with when advertising to the public, it is no wonder that sometimes businesses get it wrong. The best way to avoid issues is to have a robust internal procedure for reviewing proposed advertising material for compliance with regulatory requirements – one that is regularly reviewed to take into account the ever-changing regulatory landscape, and the social mores that drive those changes. When in doubt, seek legal advice before hitting the publish button: as we all know that, once something has been put online, it is very difficult to erase.

Georgina Hey is an intellectual property lawyer specialising in all aspects of trade mark brand and portfolio management. Her goal is to work closely with clients to ensure their brands are well cared for and their brand value is maintained. This includes working with clients to develop new brand clearance and protection strategies, advising on infringement issues, managing trade mark oppositions, advising on trade mark issues relating to the validity of registrations and intellectual property ownership structures, managing intellectual property issues for the acquisition and divestment of large portfolios (both pre and post completion), and implementing strategies to manage worldwide trade mark and domain name portfolios in a commercially efficient and effective manner.

Georgina regularly lectures and publishes on a wide range of topics, including developments in trade mark law, domain names, geographic indications, advertising clearance issues and how these legal developments interact with commercial business. In addition to being an admitted solicitor, Georgina is a registered Trade Marks Attorney and has a Masters in Intellectual Property Law, as well as a Graduate Diploma in Trade Mark Law and Practice, from the University of Technology, Sydney. Georgina was a Recommended Lawyer, Intellectual Property Asia Pacific Legal 500, and Euromoney, Australasian Woman in Business Law Awards, nominated ‘Rising Star’ in IP. Contact Georgina at Georgina.hey@nortonrosefulbright.com

Isobel Taylor is an intellectual property lawyer based in Sydney. Her work spans across all areas of intellectual property, including trade mark protection, enforcement and commercialisation, corporate transactions involving the transfer of intellectual property assets, and drafting commercial arrangements. She has also been involved in assisting with large-scale litigation matters covering a range of areas of IP. Isobel has experience in trade mark portfolio management and brand protection, assisting in the management of the IP assets of leading global and Australian brands.  She regularly publishes articles and legal updates on current topics of IP law and practice in Australia and the impacts of legal and regulatory developments on commercial business. Contact Isobel at Isobel.taylor@nortonrosefulbright.com

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