Insights

IP @ Ashurst 28 Jun 2018 Thermomix burnt by $4.6m fine for consumer law contraventions

Australian Competition and Consumer Commission v Thermomix in Australia Pty Limited [2018] FCA 556

The PDF server is offline. Please try after sometime.

What you need to know

  • Thermomix Australia Pty Ltd (Thermomix) admitted to contravening the Australian Consumer Law (ACL) by making misrepresentations about the safety of its products and consumers’ rights under the consumer guarantee provisions of the ACL.
  • The Federal Court of Australia ordered Thermomix to pay penalties of more than $4.6 million.

What you need to do

  • Suppliers of consumer products should maintain ACL compliance programs, training and policies to ensure they act quickly and responsibly when product safety issues arise.
  • In particular, businesses involved in the supply of consumer goods should ensure they are familiar with their obligations to notify the Australian Competition and Consumer Commission (ACCC) promptly of any injuries occurring through the use of their products. 

Background

Between June 2012 and July 2014, a number of Thermomix purchasers suffered serious burn injuries as a result of a safety issue concerning the Thermomix TM31 appliance.

Thermomix became aware that the lid of the TM31 could open whilst in use, causing hot liquid to escape. Thermomix senior management were aware of serious injuries occurring and were also in receipt of over 500 service reports from Thermomix’s service department regarding defective TM31 lids.
Despite knowing of the safety issue from 7 July 2014, Thermomix continued to sell a further 9,443 TM31 appliances to Australian consumers.

Thermomix finally warned consumers of the safety issue via its Facebook page on 23 September 2014. On 7 October 2014, the German manufacturer of Thermomix, Vorwerk, issued a voluntary recall notice through the ACCC and distributed 104,000 replacement sealing rings to Australian customers.

Curiously, Thermomix then decided to deny there was any issue whatsoever with the TM31. Thermomix engaged a public relations agency and on 4 March 2016, issued a press release stating:

  • there had been no recall of the TM31;
  • the TM31 was absolutely safe; and
  • there were no safety issues with the TM31 lid.

The ACCC commenced an investigation and issued Federal Court proceedings against Thermomix in June 2017 for contraventions of the ACL.

ACL contraventions

The matter had been set down for a 4 day hearing, however less than 2 weeks before the hearing was due to commence, Thermomix reached an agreement with the ACCC and admitted to the contraventions. The Court made a series of declarations stating that Thermomix had made a number of false or misleading representations and had, on multiple occasions, engaged in misleading and deceptive conduct.

Misrepresentations regarding safety

The Court found that by failing to alert consumers to the safety issue, and by continuing to sell thousands of appliances to Australian consumers between July and September 2014, Thermomix senior management deliberately exposed a large number of consumers to a risk of injury through burns. The Court also found that this decision allowed the company to generate millions of dollars in profit from sales of the TM31 during this period.

Misrepresentations regarding the recall

The Court remarked on the significance and seriousness of Thermomix deliberately publishing a false and misleading media statement. Thermomix’s press release was in the context of Vorwek’s voluntarily recall of the product under section 128 of the ACL, and Thermomix itself being aware of at least 35 injuries being caused by the TM31. The Court stated that the press release potentially undermined the instructions given in the recall notice.

Misleading consumers regarding refunds

Unrelated to the safety issues, consumers who had purchased appliances which subsequently suffered major failures were denied refunds by Thermomix. Thermomix was found to have falsely represented to four customers that they were not entitled to a refund or replacement, or that Thermomix could impose conditions on a refund (eg a confidentiality clause).

Failure to report

On 14 occasions between June 2012 and July 2016, Thermomix failed to comply with its mandatory requirement to report to the ACCC any serious injury suffered by a consumer through use of its products. Section 131 of the ACL requires the report to be made within 2 days of becoming aware of the injury, however Thermomix’s delay in reporting injuries to the ACCC exceeded 3 years in some cases.

Penalties

In recognition of the significant and serious contraventions of the ACL, Thermomix was ordered to:

  • pay a total penalty of $4.6 million;
  • pay $230,000 of the ACCC’s costs;
  • publish a notice on its website and pin a post to its Facebook page; and
  • establish and maintain a comprehensive consumer compliance program which involved developing policy, training, procedures and an injury reporting system.

Both the scope of Thermomix’s ACL contraventions and the quantum of the penalties awarded by the Court in this case were significant.

This case is also the highest penalty resulting from a contravention of the ACL’s mandatory reporting obligations. The fine for this contravention comprised $108,000 of the total penalty.

Authors: Carrick Brough, Lawyer; and Stuart D’Aloisio, Partner

Key Contacts

We bring together lawyers of the highest calibre with the technical knowledge, industry experience and regional know-how to provide the incisive advice our clients need.

Load More

Read more IP @ Ashurst - June 2018 edition here

19041p2_insights_thumbnails_3
IP @ Ashurst

Promises worth keeping: the Full Federal Court considers the test for utility in Australian patent law

Read Now

Keep up to date

Sign up to receive the latest legal developments, insights and news from Ashurst.  By signing up, you agree to receive commercial messages from us.  You may unsubscribe at any time.

Sign up

The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.

Get Started
WORLD MAP
  • REGION
  • OFFICE

        Forgot Password - Ashurst Account

        If you have forgotten your password, you can request a new one here.

        Login

        Forgot password? Please contact your relationship manager to find out more about our client portal.
        Ashurst Loader