INCREASED FEDERAL COURT PENALTY FOR MIS-SELLING NUROFEN SHOWS NEED FOR CONSUMER LAW PENALTIES REFORM

TIM HAMMOND MP
SHADOW MINISTER FOR CONSUMER AFFAIRS
SHADOW MINISTER ASSISTING FOR RESOURCES

FEDERAL MEMBER FOR PERTH

DR ANDREW LEIGH MP
SHADOW ASSISTANT TREASURER
SHADOW MINISTER FOR COMPETITION AND PRODUCTIVITY
SHADOW MINISTER FOR CHARITIES AND NOT-FOR-PROFITS
SHADOW MINISTER FOR TRADE IN SERVICES

FEDERAL MEMBER FOR FENNER

INCREASED FEDERAL COURT PENALTY FOR MIS-SELLING NUROFEN SHOWS NEED FOR CONSUMER LAW PENALTIES REFORM

Federal Labor welcomes the decision of the Full Federal Court to uphold an appeal by the ACCC against the penalty imposed on the manufacturers of Nurofen, Reckitt Benckiser, for misleading conduct under the Australian Consumer Law (ACL).

Nurofen marketed products claiming to target specific types of pain, and charged extra for these products, despite the fact that the active ingredient and dosage was exactly the same as standard ibuprofen.

The Federal Court agreed with the ACCC’s claim that the practise represented misleading conduct, but initially only awarded a penalty of $1.7 million. On appeal to the Full Federal Court the penalty has now been increased to $6 million.

It is pleasing that the ACCC’s appeal has been upheld. Nevertheless Labor remains concerned that the profits derived by Nurofen from their misleading conduct are estimated to be many times greater than even the increased penalty, potentially running into the tens of millions of dollars.

While the Liberals’ budget cuts forced the ACCC to cut a quarter of its enforcement staff, Labor committed to doubling the agency’s litigation budget to enable it to bring more cases like this.

Labor is also calling for the maximum financial penalty for companies available under the Australian Consumer Law to be increased from $1.1 million to $10 million, bringing it in line with breaches of the competition provisions in the Competition and Consumer Act 2010.

The Productivity Commission, the ACCC and some consumers’ groups agree with Labor and have also called for a strengthening of the penalties regime for breaches of the Australian Consumer Law.

The ACCC’s media release announcing the outcome of the Full Federal Court appeal can be found here: http://www.accc.gov.au/media-release/full-federal-court-orders-6-million-penalty-for-nurofen-specific-pain-products.