Full Federal Court decision impacts on law relating to advertising agencies
"Today's decision of the Full Federal Court to affirm an earlier decision impacts on consumer protection law* as it relates to advertising agencies", ACCC Chairman, Mr Graeme Samuel, said.
Saatchi and Saatchi Pty Ltd created advertisements for NRMA Health Pty Ltd which previously agreed to consent orders for misleading advertising that appeared in various newspapers in September 2001.**
"The decision of the Full Court does not undermine the ACCC's view that advertising agencies have a responsibility to ensure that they do not engage in misleading or deceptive conduct".
The Full Federal Court agreed with the single judge that the mere preparation by an advertising agency of a misleading advertisement does not constitute the making of a misleading statement. What is required is something additional such as actual publication by the advertising agency.
The Court stated: "There may be nuances of circumstances which inform the outcome of any proceeding".
Where an advertising agency's involvement goes beyond the mere preparation of an advertisement the ACCC will again consider taking action for primary liability. The ACCC can and will pursue advertising agencies if they are knowingly concerned or party to preparing advertisements that make false representations.
"In light of other recent decisions also impacting on the role of advertising agencies, the ACCC will give careful consideration to whether an appeal will be lodged", Mr Samuel said.
The Federal Court also made a finding that the advertising agency was not involved in the actual publication of the advertisements.
Ms Lin Enright, Director, Media Unit, (02) 6243 1108or 0414 613 520
Release # MR 021/04
Issued: 25th February 2004
Background
*The proceedings were instituted under sections 12DA, 12DB(1)(c), 12DB(1)(e),12DB(1)(g) and 12DF of the Australian Securities and Investments Commission Act 1989 not the Trade Practices Act 1974. Health insurance formerly fell within the definition of a financial product and was regulated through the ASIC Act. At the time these proceedings were instituted, the Australian Securities and Investments Commission had formally delegated the regulation of all consumer protection aspects of health insurance to the ACCC through the use of nominated ACCC officers as delegates. From March 2002 the ACCC has responsibility for consumer protection matters as they relate to health insurance.
**The ACCC alleged that NRMA Health's advertisements, depicting a woman nursing a new born baby, made representations guaranteeing "free delivery … no matter how advanced your pregnancy is" in an endeavour to entice consumers to transfer or join NRMA health insurance.
The advertisements contained two fine print disclaimers that stated members only received full health insurance coverage for obstetric services:
following the payment of any excess or co-payment; and
after the 12 month waiting period for obstetric related benefits had been served with NRMA or an existing fund.
The ACCC alleged that the disclaimers were inadequate, unlikely to come to the attention of consumers and failed to detract from the overall impression conveyed by the advertisement that all obstetric related health costs would be met. The Federal Court made orders by consent including an order for the NRMA to waive the 12 month waiting period for pregnancy related services and refund excesses or co-payments.
