Advertising - Get it right

Corporate Update

February has barely hit and we are already starting to see some action from the Commerce Commission in the Fair Trading space for 2017. 

Earlier this week the Commerce Commission filed charges against Bunnings (NZ) Limited, which trades as Bunnings Warehouse, for misleading advertising. In total, there are 45 charges relating to television, radio, online, newspaper and catalogue marketing, which are said to have given consumers the impression that prices offered by Bunnings for its goods were the lowest in the market, when this was not true. With each of the 45 offences having a maximum fine of $600,000, it is likely that any resulting fine will be significant.

The Bunnings action, which is now before the Court, follows the announcement earlier this month that Reckitt Benckiser (New Zealand) Limited has been fined $1M for ten charges relating to Nurofen products. These products were significantly more expensive than other ibuprofen products on the market and were advertised as relieving a specific kind of pain. It was found that the products contained the same ingredients as those found in other ibuprofen products on the market and were not in fact pain specific. Similar action was taken in Australia, where a civil penalty has been imposed on Reckitt Benckiser (Australia) Pty Limited (RBA) of AUD $6M.

In a press release relating to the Nurofen case, the Commerce Commission Chairman, Dr. Mark Berry stated that "The Commission will continue to take cases where traders do not promote their products truthfully. Products need to be as described on the box, and these were not. We take a particularly dim view when goods for human consumption are misdescribed…To be able to choose the product best suited for them, consumers must have accurate and reliable information."

Other noteworthy actions by the Commerce Commission against businesses in this area include action taken against Harmoney, who was fined $292,000 in December 2016 for a misleading marketing campaign where it advertised that consumers had been 'pre-approved' for loans, when in fact they were not. Trustpower was also fined $390,000 in September 2016 for misleading consumers over its price and terms of bundled electricity and unlimited data broadband offer.

These recent actions from the Commerce Commission should be a warning to all businesses to be diligent when it comes to advertising and their obligations under the Fair Trading Act 1986, particularly with regard to false or misleading representations. We think a good starting point when it comes to preparing marketing material is the prohibition from making unsubstantiated representations. This was introduced into law in June 2014 among other consumer law reforms. It is no longer sufficient that representations are simply true - you should have information in place to support a representation at the time it is made. This requirement to substantiate your representations should prompt you to think about and actually collate concrete evidence to justify how you are representing your particular product or service whether in packaging (such as in the case of Nurofen) or marketing material (such as in the case of Bunnings). Taking such action will help ensure that you are not misleading your consumers.

For any questions or for further information on your obligations under the Fair Trading Act, please contact one of our experts.