INSIGHT

The ACCC looking to the future – what is a 'representation with respect to a future matter'?

By Emma Gorrie
Consumer law Intellectual Property Patents & Trade Marks

In brief 3 min read

After losses in the Federal Court, the ACCC has now appealed decisions in cases against Kimberly-Clark and Woolworths. In both cases, the ACCC alleged (among other things) that misleading representations were made with respect to future matters.

The ACCC's allegations

In December 2016, the ACCC brought proceedings against Kimberly-Clark regarding its 'flushable' wipe products. It also took action against Woolworths in March 2018 regarding its 'biodegradable and compostable' disposable plates, bowls and cutlery. Though the cases are separate, they deal with similar issues. In particular, both raise the question of when a 'representation with respect to a future matter' is made.

Under section 4(1) of the Australian Consumer Law (the ACL), a representation is taken to be misleading if:

  • a person makes the representation with respect to a future matter; and
  • the person does not have reasonable grounds for making the representation.

While 'future matter' is not defined in the ACL, it is generally accepted as meaning a prediction, forecast or projection.

The ACCC argued that saying a product is 'biodegradable', 'compostable' or 'flushable' is to comment on something that is going to happen in the future: namely, whether the product breaks down in landfills or domestic composting within a reasonable time (Woolworths), or whether the product would be suitable to flush down the toilet given how the product is going to travel through the sewage system (Kimberly-Clark).

Woolworths and Kimberly-Clark each countered with the position that the representations were not 'with respect to future matters' and, even if they were, each party had reasonable grounds for making the relevant representations. Woolworths pointed to the information it had requested and received from its supplier as to the environmental credentials of the disposable products. Kimberly-Clark relied on its wipes complying with industry guidelines for making 'flushable' claims.

The court's approach

In both cases, the Federal Court rejected the ACCC's argument that the relevant representations were 'with respect to future matters' (as well as rejecting that the claims were misleading). The court's rationale was that 'biodegradable', 'compostable' and 'flushable' are descriptive as to the present characteristics of a product, deriving from the product ingredients or the way in which the product was manufactured. No prediction, forecast or projection was involved in making these claims. Woolworths successfully submitted that other similar claims (relating to product characteristics and not future matters) included 'poisonous', 'flammable', 'non-toxic' and 'washable'.

Both decisions referred to ACCC v Giraffe World Australia Pty Ltd (1999) 95 FCR 302, which concerned representations about the therapeutic benefits of a product. The product was a mat that emitted negative ions, said to have health benefits if a person slept on it. Giraffe demonstrates that a statement to the effect of 'by using this mat, which emits negative ions, you will obtain a health benefit', is a representation with respect to a future matter. This is because the statement represents that the mat will repeat its performance for the benefit of those who buy it. In contrast, consider the representation that 'this health mat emits negative ions'. The latter statement is about a performance characteristic, and is not 'with respect to a future matter', even though the truth of the statement might only be apparent in future. By the same token, claims that a product is 'biodegradable', 'compostable' or 'flushable' are not claims as to future matters.

Watch this space

While the ACCC is clearly concerned with the underlying conduct the subject of these cases, it seems that it may also have a particular interest in pursuing what it perceives to be representations as to future matters. It will be interesting to see what the Full Federal Court has to say.

Businesses interested in trying to avoid making any misleading representations, as to future matters or otherwise, can be proactive by ensuring they only ever make statements that can be substantiated.