The Australian Competition and Consumer Commission has appealed the Federal Court’s decision ordering Reckitt Benckiser, manufacturers of Nurofen pain killers, to pay penalties of $1.7 million for contravening the Australian Consumer Law.
“The ACCC will submit to the Full Court of the Federal Court that $1.7 million in penalties imposed on a company the size of Reckitt Benckiser does not act as an adequate deterrent and might be viewed as simply a cost of doing business,” ACCC Chairman Rod Sims said.
The case involves product packaging for Nurofen which claimed that various versions of the drug would treat specific parts of the body, so-called “targeted pain relief”.
In fact, each Nurofen Specific Pain product contains the same active ingredient, ibuprofen lysine 342mg, which treats a wide variety of pain conditions and is no more effective at treating the type of pain described on its packaging than any of the other Nurofen Specific Pain products.
In December 2015, following admissions by Reckitt Benckiser, the Court found that the company engaged in misleading or deceptive conduct by making such representations on its website and product packaging.
On 29 April 2016, the Federal Court ordered Reckitt Benckiser to pay penalties totalling $1.7 million. The ACCC had submitted to the Court that a penalty of at least $6 million was appropriate in order to send a strong deterrence message, taking into account the longstanding and widespread nature of the conduct, and the substantial sales and profit that was made by selling the product.
“This is particularly the case when the judge found that Reckitt Benckiser had made many millions in profits from sales of 5.9 million units of these products at around 8500 outlets during the relevant period,” Sims said.
Consumer group CHOICE has welcomed the ACCC’s decision, while upping the ante considerably.
“CHOICE believes Nurofen should have faced fines up to $60 million for orchestrating such a significant consumer con over so many years,” said CHOICE head of media Tom Godfrey.
“A fine of $1.7 million is laughable to a business as large as Reckitt Benckiser which continues to make these dodgy targeted pain relief claims on packs. The fact that they are yet to remove the targeted pain relief claims from pain pill packs on supermarket shelves speaks volumes about how insignificant this penalty is. Adding a waiver to the pack’s fine print will not take the pain out of your hip pocket.
“These massive global companies should be made to pay fines that fit the crime. We believe the law needs to be changed so that courts can and will issue penalties that give shonky companies a real headache.”
CHOICE found a $10.77 price difference between generic ibuprofen ($1.65) and Nurofen Period Pain Caplets ($12.42).
“With the ACCC estimating that 5.9 million units of these products were sold at 8500 outlets during the relevant period, we estimate the company turned over at least $63 million more than compared to a company selling generic branded product.
“With consumers still paying a 652 per cent mark-up for pain pills with these dodgy claims, it’s time the penalties were dramatically increased to send a strong message to businesses that do not have consumers’ best interests at heart,” said Godfrey.
CHOICE first called the company out for its deceptive claims six years ago by awarding Nurofen one of its Shonky Awards.
“The highest available fine under the law would have been only $6 million, which is pocket change for these giant companies,” Godfrey said.
Penalties are capped at a maximum of $1.1 million when a company breaches provisions relating to consumer protection and misleading advertising of the Competition and Consumer Act (2010). Penalties can be as high as $10 million per breach if a company breaches other sections of the same Act.
In its submission to the review of Australian Consumer Law later this week, CHOICE will call for consumer protection laws to be updated so that the courts can hand down fines that match the size of the company and the harm caused by the behaviour.
“If a $10 million per breach penalty had been available in this case, like it is available under parts of the Competition and Consumer Act, Reckitt Benckiser could have been facing a more appropriate fine of $60 million,” Godfrey said.
Fairfax press reports that Justice James Edelman said the penalty would have been “far greater” if it were not for a few factors, including that the ACCC had not argued that the company’s conduct was intentional or reckless. He also gave the group a discount for co-operating with the ACCC’s investigation and admitting to its wrongdoing, which led to other allegations falling away.