A recent decision of the Federal Court demonstrates how businesses can take action against competitors for possible breaches of the Australian Consumer Law (ACL) without waiting for ACCC intervention and how this type of private action plays a role in protecting consumers. Producer of health, hygiene and nutrition products, Reckitt recently obtained urgent, interim orders in the Federal Court restraining Procter & Gamble (P&G) from representing that P&G’s Fairy 30 Minute Miracle dishwashing product (Miracle) was more effective at cleaning in a 30-minute dishwashing cycle than P&G’s other Platinum Plus dishwashing product. Of significant interest is that Reckitt partly brought the Court proceedings to restrain P&G from making allegedly false comparison claims between various P&G products.

Background

Reckitt supplies Finish branded dishwashing products, and its competitor, P&G, supplies ‘Fairy’ branded dishwashing products, including Miracle, ‘Platinum Plus’ and ‘All in One’. After P&G started producing the Miracle product in March 2023, Reckitt alleged that the packaging for Miracle represented, among other things, that it is better at cleaning in a 30-minute cycle than the other products in P&G’s own Fairy range and, further, that P&G had an adequate scientific basis for that representation (Representation). Reckitt also alleged that P&G wrongly represented that Miracle was superior to similar Reckitt products. However, it will be covered in subsequent Maddocks updates.

Reckitt alleges that P&G’s Representation contravenes the ACL in several respects – all variations on Reckitt’s key concern that the Representation was misleading and deceptive due to:

• the product name, '30 Minute Miracle'
• the primary statement made on the front of the packaging, 'Better Cleaning^ even in 30 minutes'
• the use of a fine-print disclaimer qualifying the primary statement that 'Tested vs. All in One', another Fairy dishwashing product
• the depiction of Miracle and its features, in a graph, on the back of the packaging.

The Federal Court's decision

To grant the injunction sought by Reckitt, the Court had to be satisfied that Reckitt had an arguable case at this early stage and that the balance of convenience favoured granting the injunction. The Court considered that a consumer observing Miracle’s packaging would not be aware of the fine print qualification using the chevron and the qualifying words except on a prolonged inspection of the packaging, meaning it was ineffective as a qualifying statement. On the whole, the Court considered that the packaging represented that Miracle is better at cleaning in a 30-minute cycle than other Fairy dishwashing products (not just its ‘All in One’ product), which was contrary to P&G’s testing results.

The Court accepted that the injunction sought by Reckitt, if granted:

• would stop the current launch of the Miracle product in the Australian market and would cause significant disruption to P&G’s intended marketing
• would cause P&G to suffer loss in the form of currently packaged products that must be stored or abandoned
• may cause P&G to suffer loss in terms of its reputation with its major retailers and with consumers
• may cause P&G to lose its first mover advantage with respect to its Miracle product.

Notwithstanding the above factors, the Court sided with Reckitt and ordered an interim injunction to restrain P&G from making the Representation given the strength of Reckitt’s claim and that P&G’s evidence did not justify the Representation being made. Ultimately, the Court decided that, in the circumstances of the case, the interests of consumers in receiving clear and accurate product information (rather than P&G’s private interests) were paramount and justified its intervention.

The Court decided to grant the injunction despite acknowledging that it was not convinced, at this initial stage, that P&G had also represented that Miracle was better at cleaning in a 30-minute cycle than products sold by P&G’s competitors (such as Reckitt). In other words, Reckitt was successful in obtaining the injunction and preventing the sale and marketing of P&G’s Miracle product even though the Court did not find that P&G had made any actionable claim about the performance, or lack thereof, of Reckitt’s products.

Key takeaways

The Court’s decision in Fairy is a reminder that all parties have standing as a matter of public interest to bring an injunction for breaches of the ACL, given that the harm caused to Reckitt (the Applicant) was not treated as a significant reason for granting the injunction. The practical effect of the injunction was that P&G was forced to withdraw the Miracle product from the market. Clearly, the commercial harm to P&G caused by the withdrawal of a product is serious. But, at least in this case, the Court felt that commercial harm did not counterbalance the danger to consumer welfare and protection.

This decision also provides a blueprint for how companies can successfully use Court proceedings to disrupt their competitors. Reckitt is unlikely to have initiated proceedings with the primary aim of protecting consumers and rather was most likely seeking to interfere with Miracle’s launch. Crucially, however, the arguments that held the most weight with the Court at this early stage were those relevant to consumer harm. Ultimately, companies may be able to best protect their commercial interests by, perhaps counterintuitively, strategically advancing consumer protection arguments instead of focusing on any commercial disadvantage.