Fine still too small to hit where it hurts
CHOICE has welcomed the decision to hit Nurofen manufacturer, Reckitt Benckiser, with an increased $6 million fine over its dodgy targeted pain relief products, but says the penalty still doesn't go far enough.
"These companies make huge profits when peddling these deceptive and misleading claims, but the courts' hands are tied when it comes to handing down an appropriate penalty," says CHOICE spokesperson Nicky Breen.
"The law needs to be changed so that courts can and will issue penalties that give companies a real headache."
The Federal Court originally fined Reckitt Benckiser just $1.7 million dollars for selling targeted pain relief products which didn't target pain, but the penalty was increased after an appeal from the ACCC.
The company claimed that each product was formulated to treat a particular area of pain, when in fact they all contained the exact same active ingredient of ibuprofen lysine 342mg.
Reckitt Benckiser has used this dodgy marketing for years. CHOICE first called the company out for its deceptive claims by gifting Nurofen one of our Shonky Awards six years ago.
"While we welcome the court's decision to impose a higher penalty, it's pocket change compared to the profit Reckitt Benckiser would have made from conning consumers into paying top dollar for products that weren't any more effective than cheaper generic pain relief pills," says Breen.
Consumer protection needs improvement
Penalties are capped at a maximum of $1.1 million when a company breaches provisions of the Competition and Consumer Act (2010) relating to consumer protection and misleading advertising. Penalties can be as high as $10 million per breach if a company breaches other sections of the same Act.
"It's time to update our consumer protection laws so that the courts can hand down fines that match the size of the company and the nature of the behaviour," Breen says."CHOICE is calling for these penalties to be dramatically increased in the current review of the Australian Consumer Law."
"If a $10 million penalty per breach penalty had been available in this case, like it's available under other parts of the Act, Reckitt Benckiser could have been facing a more appropriate fine of $60 million. This kind of fine is needed to send a clear signal to big business that there's no profit to be made in deceiving consumer."
Read more about CHOICE's submission to the federal government's current review into Australia's consumer law framework.