Week Four readings - week 4 reading material PDF

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Week Four: Advertising Text: [5.05] [5.10] [5.15] [5.20] [5.25] [5.30] [5.70] [5.135] [5.195] [5.255] [5.275] [5.285] [5.290] [5.300] [5.350] [5.365]

5.5 Introduction:  Advertising is the principal means by which firms promote the supply of their products and consumers make purchasing choices.  Reduces the cost to both suppliers and consumers of entering into supply transactions by eliminating the need for them to make exhaustive direct contacts beforehand: suppliers avoid the search costs of seeking out customers individually and consumers also avoid these costs by having information about products made available to them, rather than having to locate it for themselves. 5.10 Advertisement must be misleading, not merely fair  S18 – an advertisement must be misleading or deceptive or likely to be so – not sufficient that it is unfair  AsMasonJsai di nPar kdal eCust om Bui l tFur ni t ur ePt yLt dvPuxuPt yLt d( 1982)149

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CLR191at202:… i ti si mpor t antt or ecal lt hats52( 1)i s“ notconcer ned,assuch,wi t h anyunf ai r nessofcompet i t i oni nt r adeasbet weent wot r ader s”(Hor nsby( 1978)140 CLR,at226;cfs5oft heUni t edSt at esFeder alTr adeCommi ssi onAct1914) .I ti snot di r ect edex cl usi v el yorev enpr i mar i l yt osi t uat i onsofpassi ngoff;i text endst oany conductt hati sl i k el yt omi sl eadordecei v e,asf orex ampl e,t hemaki ngofnegl i gent s t at ement sandf al ser epr esent at i onsast ot hequal i t yofgoods .I ti snotenought hat conductdamagesar i v alt r ader . Ex ampl e–adv er t i si ngpr i c essetar t i fi ci al l yl owi nor dert oat t r actcust omer sawayf r om ar i v alfir m andt her ebydr i v ei toutofbusi nesswi l lnotcont r av enes18–mayonl y cont r avenes46i ft headv er t i serhassubst ant i almar k etpower .

General Principles: Whether an advertisement is misleading or deceptive is quintessentially a question of fact - Australian Competition and Consumer Commission v We Buy Houses Pty Ltd [2017] FCA 915 at [57] per Gleeson J. As a result, the decisions reached in similar cases in the past can only ever provide guidance and cannot determine the outcome of a new case. - Hayne J warned in Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at 467, “it is the statutory text which controls” so that “there is no little danger in attempting to extrapolate from the decided cases to a rule of general application. No such rule can stand in the place of the statutory text”. Allsop CJ in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 at [41]–[43] ( ACCC v Coles ): It is necessary to view the conduct as a whole and in its proper context. This will or may include consideration of the type of market, the manner in which such goods are sold, and the habits and characteristics of purchasers in such a market. The context will also include relevant disclaimers or explanations. In assessing advertising material, the “dominant message” of the material will be of crucial importance. Where conduct or representations is or are directed to members of the public at large, the conduct or representations must be judged by their effect on “ordinary” or “reasonable”

members of the class of prospective purchasers. In a context such as the present, the purchasing of a staple such as bread in a supermarket, the ordinary or reasonable person may be intelligent or not, may be well educated or not, will not likely spend any time undertaking an intellectualised process of analysis, will often be shopping for many other items, and will be likely affected by an intuitive sense of attraction rather than by any process of analytical or logical choice. The dominant message of advertising for bread is likely to be simple, though intuitively diffuse. What is reasonable care by members of the public must be judged in the above context. The purchase of bread from a baker or bread shop should not normally call for astute attention to disclaimers about the wares on sale at the counter. [citations omitted] Following are important and relevant to advertisements – target audience, entirety of the advertisement, dominant message and nature of the advertisement, transaction and product involved. 5.20 

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Target audience: Determine the target audience to whom the conduct is directed - Conduct will not contravene s 18 if a reasonable member of the audience would not be misled, even though it did mislead a person whose reactions are extreme or who did not take reasonable steps to investigate the claims. Conversely, an advertisement can still contravene that section if a reasonable member of the audience would be misled, even though it did not mislead those members who are unusually careful: see Australian Competition and Consumer Commission v Emerald Ocean Distributors Pty Ltd (2006) ATPR ¶42-096 at 44,717. Directed to a public at large or to a section of the public, the target audience will be the class of prospective retail purchasers of the product or service marketed by the respondent: Campomar Sociedad, Limitada v Nike ((2000) 202 CLR 45 at [101] (see [3.155])). - However, in recognition that there is scope for diversity in response among reasonable members of this group, the Federal Court has frequently said that there is nothing in Campomar that prevents a court from assessing the conduct by reference to the class of persons who are most likely to be misled. One of the clearest statements of this principle is by Finkelstein J in .au Domain Administration Ltd v Domain Names Australia Pty Ltd [2004] FCA 424 at [21]: - Another potential difficulty arises because the class to whom the impugned conduct is directed will often comprise a diverse group. That is, the members of the group might include the uneducated, the inexperienced, the ignorant and the unthinking as well as the educated, the intelligent and the informed consumer. How then is one to identify and give characteristics to Campomar Sociedad’s hypothetical individual? Logic demands that if one is dealing with a diverse group then, for the purpose of determining whether particular conduct has the capacity to mislead, it is necessary to select a hypothetical individual from that section of the group which is most likely to be misled. If the court is satisfied that this hypothetical individual is likely to have been misled by that conduct, that would be sufficient.

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Affirmed by the Full Court of the Federal Court on appeal, where it was pointed out that “[w]ithin a large class there may be a number of subclasses of ordinary and reasonable people”, some who are well informed about the relevant industry and its practices (in that case the system of domain name registration) and others who are not: Domain Names Australia Pty Ltd v .au Domain Administration Ltd (2004) 139 FCR 215, [2004] FCAFC 247 at [26] per Wilcox, Heerey and RD Nicholson JJ. The conduct must then be assessed by reference to its effect on the ordinary or reasonable members of that class In Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (In liquidation) (No 2) [2017] FCA 709 at [26] Beach J explains the implications of adopting a representative referee as the benchmark: This hypothetical construct avoids using the very ignorant (or gullible) or the very knowledgeable (or astute) to assess effect or likely effect; it also avoids using those credited with habitual caution or exceptional carelessness; it also avoids considering the assumptions of persons which are extreme or fanciful. Where the conduct is directed to the public at large and involves a staple household product, the ordinary or reasonable person is not likely to undertake an overly intellectual analysis of the claim made, and “will be likely affected by an intuitive sense of attraction rather than by any process of analytical or logical choice”: see ACCC v Coles at [43] (see [5.15]). - In those circumstances the “dominant message” of the advertising material will be of critical importance: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [45]; The assessment whether the ordinary or reasonable person would be misled will involve considering such matters (where relevant) as their age, geographical location, ethnicity and background in speaking English, sophistication, habits and characteristics, and degree of familiarity with the subject matter and with the common practices in that industry (including the common marketing techniques employed in that industry). These factors have been specified in cases such as Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640, 656 [52]–[53] per French CJ, Crennan, Bell and Keane JJ; It is necessary to show that a “not insignificant number” of the members of the target audience were misled or likely to be misled. A considerable number of authorities have adopted this additional test; see, for example: Hansen Beverage Co v Bickfords (Aust) Pty Ltd (2008) 171 FCR 579 at [46] per Tamberlin J and at [66] per Siopis J; Authorities it is not sufficient that a small number of persons would be misled, even though the reaction of those persons is reasonable. This view was emphatically rejected by Finkelstein J in .au Domain Administration Ltd v Domain Names Australia Pty Ltd [2004] FCA 424, where it will be recalled his Honour emphasised that conduct will be misleading where it would mislead some reasonable persons, even though other reasonable persons would not be misled. His Honour stated that a requirement that a significant number of people would be misled was wrongly imported from the law of passing off and was inconsistent with Campomar , and went on to say (at [25]):

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It seems to me that there is simply no warrant for imposing a requirement that in a “representation to the public” case significant members of the public must be misled by the impugned conduct before there can be a contravention of s 52 [of the Trade Practices Act ]. First, s 52 does not prescribe this requirement. Second, there is no reason in principle why the requirement should exist. Third, it would be strange if a court were to determine that certain conduct had the capacity to mislead (and did in fact mislead a handful of people) but nevertheless held that the conduct was not actionable because an insufficient number of people were misled. - Some authorities have suggested that the two tests can be reconciled on the basis that a finding that reasonable members of the class would be likely to be misled intrinsically carries with it the conclusion that a significant number of recipients would be misled: National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90 at [23] per Dowsett J and [70] per Jacobson and Bennett JJ; Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (In liquidation) (No 2) [2017] FCA 709 at [42] Beach J rejected the argument that satisfying the Campomar formulation automatically satisfies the “not insignificant number” test, preferring the view that a finding that a “not insignificant number” of members of the class is likely to be misled is a conceptually separate requirement that needs to be satisfied. The debate is likely to continue until an appropriate opportunity arises for the High Court to rule on the subject. Members of a target audience may have a degree of scepticism about advertising - However, in ACCC v Coles Allsop CJ stated (at [160]) that courts should be reluctant to adopt this view as it could result in advertisers being given a licence to “bend the truth”: There was some debate and discussion during the case about what was called the “degradation of language” and about a mistrust or healthy cynicism of advertising by the public. One needs, of course, not to be unrealistic about the world, advertising or consumer behaviour. Advertising should not be parsed and analysed in the fashion of a 19th Century equity draftsperson. Nevertheless, the courts should be astute and careful not to permit consumers to be misled on available meanings or connotations of phrases deliberately chosen to sell products on the basis that everyone takes advertising with a pinch of salt. To place emphasis on advertising licence that bends the truth will not only degrade the language, but lead to a culture of deception in the market. These matters do not elevate this case to a question of principle, but they should be borne in mind when broad laudatory language, intended to affect the buying decisions of members of the public, is such as to lead consumers into error and so to mislead or deceive, and the justification for such involves an intellectual shrug and a knowing nod to the effect that the public is cynical enough to look after itself.

5.25 Entirety of the advertisement and overall context

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An advertisement must be looked at in its entirety including any disclaimers or qualifications and in the overall context in which it appears Where the advertiser seeks to defend the claim on the basis that information qualifying or limiting the primary offer or headline claim is contained elsewhere in the advertisement it will be relevant to consider whether there was a signifier drawing the consumers attention to the further information: Australian Competition and Consumer Commission v Boost Tel Pty Ltd [2010] FCA 701 at [77] per Siopsis J. - To be effective the signifier, where used, must be prominent and conspicuous and the further information it signifies must generally be proximate to the misleading dominant representation or easily able to be found and accessed: REA Group Limited v Fairfax Media Limited [2017] FCA 91 at [101] per Murphy J (extracted at [5.350]); Conduct must be assessed against the background of all surrounding circumstances. Relevant context in which the conduct must be considered encompasses both internal context such as surrounding words and the meaning they can give to other words, as well as external context such as the type of market and the techniques employed in that market to sell the goods or services: Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 at [215] per Edelman J. - The external context will also include the physical environment in which the claim is directed to the consumer. In TPG Internet the plurality drew a distinction between the situation where the target audience consists of potential purchasers focused on the subject matter of the purchase in the calm of a showroom (as was the case in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191), and that of persons who have had unsolicited advertisements imposed upon them (as in TPG Internet itself). - Eternal context includes any hangover effect of representations in earlier by related promotional material or branding that are likely to still be influencing consumers impressions of the subject advertisement; Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904 at [20] per Gordon J. - Earlier packaging which was deceptively similar to that used on an existing product might still influence consumer perceptions of the product even though the packaging is later changed to reduce the similarity in appearance as illustrated by The Kettle Chip Co Pty Ltd v Apand Pty Ltd (1993) 46 FCR 152.

5.30 Dominant Message  An advertisement must be looked at in its entirety before a conclusion is reached about whether it is misleading or deceptive means that an appropriately worded qualification, disclaimer or clarification may prevent the more prominent parts of an advertisement contravening s 18. - This will only occur where the qualification, exclusion or clarification would be read and understood by reasonable members of the target audience in such a way as to prevent the advertisement from misleading them. - Consumers will pay only fleeting attention to an advertisement and will not closely study its constituent parts, instead only absorbing its general thrust.

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One of the earliest statements of this principle is by Merkel J in Telstra Corporation Ltd v Optus Communications Pty Ltd [1996] FCA 1898 at [48]: In television and print advertising where a false dominant impression is conveyed, its message will not be ameliorated by the accuracy of the detailed message which is derived from a careful analysis of all the constituent parts of the advertisement. Where it is the “dominant selling pitch” that is likely to be conveyed to the ordinary or reasonable consumer, advertisers will not escape liability merely by including a disclaimer or by disclosing the conditions of the offer in the “fine print” of the advertisement. - This will be the case where the fine print does not merely qualify the primary representation, but seriously undermines the substance and integrity of the primary message - The corrective information requires greater prominence in order to negate that primary misleading message - Australian Competition and Consumer Commission v Boost Tel Pty Ltd [2010] FCA 701 at [77]–[81] per Siopsis J; Question of fact in each case as to whether it is the dominant messaged that will be conveyed to the ordinary or reasonable consumer - Often be the case in respect of mass-marketed advertisements where the advertisement is intrusive and the purchasers attention is likely to be engaged only fleetingly - It is less likely to be the case in circumstances where the prospective purchaser is carefully focused on the purchase decisions

5.70 - Australian Competition and Consumer Commision v Reckitt Benckiser (Australia) Pty Ltd (No 4) [2015] FCA 1408

Facts - The respondent pharmaceutical company represented that each of four Nurofen Specific Pain Relief products was specifically formulated to treat (respectively) back pain, period pain, migraine pain, and tension headaches. In fact, the products were all identically formulated and contained the same active ingredient in the same dosage. That active ingredient (ibuprofen) is not capable of “targeting” any particular kind of pain. The products were sold at about double the price of standard Nurofen which also provided the same dose of ibuprofen. The respondent admitted various contraventions of ss 18 and 33 of the ACL. Held – [13] It is now common ground that the statements above involved two Packaging Representations . The common ground accords with the preliminary view I had formed prior to this trial and which I am now satisfied is correct. The common ground is that by making the packaging statements described above, Reckitt Benckiser represented that (1) each product in the Nurofen Specific Pain Range is specifically formulated to treat the particular type of pain specified on the packaging relevant to that product; and (2) the product solely or specifically treats the particular type of pain specified on the packaging relevant to that product and not other types of pain. [14] These two Packaging Representations contravene s 18 of the Australian Consumer Law because they are misleading or deceptive or likely to mislead or deceive. The Packaging Representations also infringe s 33 of the Australian Consumer Law because they are liable to mislead the public as to the nature, the characteristics, or the suitability for purpose of the Nurofen Specific Pain Range products. [16] The reason why Packaging Representations for each product in the Nurofen Specific Pain Range infringe ss 18 and 33 is because: (1) each product contains the same active ingredient; (2) the ARTG approved indications for each product is the same; (3) each product is of the same formulation; (4) and no product is any more or less effective than the others in treating any of the symptoms shown on the packaging. 5.135 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 High Court of Australia But to determine whether there has been any contravention of s 52(1) it is necessary to inquire ...