CHOICE calls for bigger penalties after court increases Reckitt Benckiser fine.
Consumer Group 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 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 Nicky Breen, CHOICE Spokesperson.
“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 Australian Competition and Consumer Commission.
“Reckitt Benckiser 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, in 2010,” Ms Breen says.
“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.”
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. CHOICE is calling for these penalties to be dramatically increased in the current review of the Australian Consumer Law,”says Ms Breen.
“If a $10 million penalty per breach penalty had been available in this case, like it is available under other parts of Competition and Consumer 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 is no profit to be made in deceiving consumers,” Ms Breen says.
While the company claimed that each product was formulated to treat a particular area of pain, in fact they all contained the exact same active ingredient of ibuprofen lysine 342mg.
The Federal Government is currently conducting a review into Australia’s consumer law framework.