What you need to know
- Significant penalties can be imposed for misleading representations made on product packaging or otherwise regarding purported differences between products which are in fact the same product.
- Lack of care in marketing campaigns may be found to amount to intentional misleading conduct.
What you need to do
- Take care to ensure that marketing materials and packaging do not contain any misleading or false statements.
- Ensure that a robust marketing compliance regime is adopted, including regular and effective legal training programs.
- Don't allow your aim to increase product sales cloud your judgement and lead to false or misleading statements about your products.
The misleading and deceptive conduct of GSK
In earlier proceedings (Australian Competition and Consumer Commission v GlaxoSmithKline Consumer Healthcare Australia Pty Ltd [2019] FCA 676), GlaxoSmithKline Consumer Healthcare Australia Pty Ltd and Novartis Consumer Health Australasia Pty Ltd (together, GSK) were found to have engaged in misleading and deceptive conduct and the making of false representations contrary to sections 18, 29(1) and 33 of the Australian Consumer Law (ACL) in the way that it promoted its Voltaren Emulgel and Voltaren Osteo Gel products.
The products and representations made
The proceedings involved the marketing and sale of two Voltaren products: one sold under the sub brand Emulgel for the temporary relief of local pain and inflammation and one sold at a premium price under the sub brand Osteo Gel for the relief of osteoarthritic symptoms of the knees and fingers. The implied representation conveyed was that Osteo Gel was specifically formulated to treat, and was more effective than Emulgel in treating, local pain and inflammation associated with mild forms of osteoarthritis when the products were in fact identically formulated and equally effective in treating the condition.
Remedies
The parties agreed the terms of the declarations to be made and also agreed that GSK should pay a penalty of $4.5 million for its conduct. This decision addresses the agreed orders and the question of costs. In this article, we have focused on the aspects of the decision related to the penalty.
Penalty
The Court may make orders in accordance with an agreement between the parties with regard to imposition of a penalty if satisfied that it is appropriate to do so.
Justice Bromwich noted that the principal purpose of a civil penalty is deterrence so as to promote public interest in compliance. He stated that the penalty should not be so low as to be no more than the cost of doing business and not so high as to be disproportionate to the contravention. For general deterrence, he said that it was important to send a strong message to the pharmaceutical industry.
In relation to specific deterrence, Justice Bromwich noted that GSK commenced mitigating steps after the liability decision was handed down in a case involving the Nurofen product in late 2015 in which a penalty of $6 million was applied. In that case the ACCC successfully took action against Reckitt Benckiser in relation to its "specific pain" range of products which were claimed to target back pain, migraine, tension headache or period pain when they all contained the same active ingredient.
Justice Bromwich mentioned that it was appropriate to have regard to the size of the respondents and their financial position. It was also relevant that a vast number of contraventions took place each time a sale was made (noting that 1.4 million units were sold by reference to the misleading representations) and each time a consumer considered the misleading representations on the packaging and the websites promoting the product. However, it was also pointed out by Justice Bromwich that the respondents had not previously been found to have contravened the ACL and it was not possible to quantify the impact of the misleading conduct on consumers (who may have decided to purchase the Osteo Gel product for a variety of reasons).
Justice Bromwich also made reference to GSK's internal and external training programs, including a presentation by external lawyers about the issues raised by the Nurofen decision. This gave rise to a product review and a revision to the Osteo Gel packaging before the ACCC raised concerns.
After discussing the factors that impact the quantum of the penalty, Justice Bromwich stated that the agreed penalty falls within the "lower part of an acceptable range".
Authors: Fiona Brittain, Senior Associate; Lisa Ritson, Partner.
