The case of Australian Competition and Consumer Commission v Thermomix in Australia Pty Ltd  FCA 556, offers some key takeaways for companies that sell or supply goods into the Australian market and particularly when faced with a product safety issue.
In short, the ACCC brought a claim against Thermomix Australia Pty Ltd for contraventions of the Australian Consumer Law and, as part of a negotiated settlement with the ACCC, Thermomix made admissions in relation to various conduct. You can read more about the conduct and admissions in the judgment; however, they included:
1. Continuing to supply and promote the product when senior management was aware of possible public safety concerns;
2. Failing to report injuries suffered by consumers;
3. Representing that the product was not subject to a recall; and
4. Representing to consumers that they were not entitled to refunds or replacements.
When considering the appropriate penalties for the contraventions, the Federal Court considered the following factors as aggravating the offences of Thermomix in Australia Pty Ltd, so as to warrant a pecuniary penalty of $4.6 million:
Thermomix’s product safety issues were known to senior management by July 2014, and to its manufacturer Vorwerk, however Thermomix continued to supply and promote the TM31 appliance in circumstances where it knew of the safety issues and did not warn customers about them;
Thermomix did not have any ACL compliance programs, training and policies in place at the time;
The conditional refunds offered to customers (that senior management knew about) were seemingly motivated by a desire to contain the commercial damage suffered, and were not mistakenly entered into by individual staff members;
The conduct of making a public statement that the product was not the subject of a recall undermined the purpose and efficacy of voluntary recall notices, exposing consumers to the risk of injury;
The conduct exposed a large number of consumers to the risk of serious injury for an extended period of time; and
The contraventions generated sizeable profits for the company (which in this case was $3.74 million in profits after tax).
What does it all mean?
Practically speaking, the case highlights that where a business is involved in the importation or supply of products and where product safety issues arise:
They act quickly to obtain any information required from the supplier and they do not make public statements contradicting any voluntary (or involuntary) recall that may have occurred; and
There is a policy in place to deal with the situation where the business is notified of an issue that caused or could cause serious injury, illness or death to an end consumer.
It is also important to note that section 139B(2) of the Competition and Consumer Act 2010 (Cth) provides:
"Any conduct engaged in on behalf of a body corporate:
a. by a director, employee or agent of the body corporate within the scope of the actual or apparent authority of the director, employee or agent; or
b. by any other person:
i. at the direction of a director, employee or agent of the body corporate; or
ii. with the consent or agreement (whether express or implied) of such a director, employee or agent;
if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent;
is taken, for the purposes of this Part or the Australian Consumer Law, to have been engaged in also by the body corporate.” (Emphasis added).
Accordingly, whilst your business may not be fielding calls from consumers directly as was the case in Thermomix, your business may be dealing with end suppliers such as supermarkets or other retail businesses. In those circumstances you should ensure: a) There are clear policies in place to set out for your employees the procedures they must follow in the event they are notified of a real or potential consumer safety issue; and b) That there is a training programme for executive staff, and for any staff members that might be liaising with the supplier and the buyer in relation to the business’ ACL obligations including product safety or product quality issues.
The key takeaways: If your business is supplying goods into the Australian market, always consider your obligations under the ACL, develop a policy for your staff and make sure you implement appropriate training.
If you would like some further information regarding this topic please get in touch.
Terri Bell, Principal Ellie Wolfenden, Lawyer
This guide should not be relied on as a substitute for obtaining legal, financial or other professional advice. It is intended to provide general information only and is not intended to be comprehensive. The contents do not constitute legal, financial or taxation advice and must not be relied upon as such. You must seek specific professional advice tailored to your personal circumstances before taking any action based on this publication.