Court declares false and misleading representations made on insulation rating labels
The Federal Court, Melbourne has declared that insulation rating labels on the packaging of certain Greenstuf polyester insulation batts falsely represented their performance characteristics and were misleading and deceptive.
Declarations and orders were made by consent against Autex Pty Ltd, an insulation manufacturer, for breaches of the Trade Practices Act 1974 and for breach of a court enforceable undertaking following civil proceedings by the Australian Competition and Consumer Commission.
The ACCC took the action against Autex in February this year, alleging the insulation rating labelling on the packaging of certain Greenstuf polyester insulation batts manufactured by Autex in the period from May 2005 until August 2006 was misleading or deceptive and, in some instances, false.
The ACCC principally alleged Autex Pty Ltd engaged in the offending conduct by misleading retail customers of these insulation batts in relation to the batts' thermal resistance rating or "R Value"*. The ACCC alleged such customers may have been led to believe the 'Total' R Value rating referred to on the batts was a "Material" R Value.
It also alleged the company misled retail customers by representing that these batts were labelled in accordance with AS/NZS 4859.1: Australian/New Zealand Standard: materials for the thermal insulation of buildings when this was not the case.
Additionally, the ACCC alleged that Autex Pty Ltd had engaged in misleading conduct in relation to the labelling of its polyester insulation batts with a "Total R 3.2" and "Total R 3.8" thermal rating. The ACCC alleged that these batts could not achieve the represented thermal resistance even if the batts were installed in accordance with the provisions of the Building Code of Australia.
The ACCC's proceedings also concerned the alleged failure of Autex Pty Ltd to comply with undertakings given to the ACCC in March 2005**.
In addition to declaring that Autex's labelling of its Greenstuf polyester batts contravened the Act and that it had breached its undertaking to the ACCC, the Federal Court further ordered by consent that Autex be restrained for three years from representing that its polyester insulation batts have performance characteristics and benefits which they do not have. Autex is also required to publish a notice about this proceeding in major daily newspapers throughout Australia.
"Consumers are entitled to expect that labelling on products is truthful and accurate," ACCC Chairman, Mr Graeme Samuel, said today.
"They rely on the labelling and will often make purchasing decisions because of it. The importance and need for suppliers of products to 'get it right' is paramount in circumstances where consumers have no real alternative but to rely on the information contained on the supplier's labelling. This is particularly so in the case of labelling of insulation products.
"This latest action concludes what appears to be an ongoing problem with some insulation industry participants' compliance with the Act.
"While the ACCC will assess each case on its merits about the appropriate level of enforcement action to take, insulation industry participants who now come to the ACCC's attention can expect their case to be considered in terms of more rigorous enforcement potential.
"This will include serious consideration being given to a criminal prosecution against the trader concerned."
*The measure of the thermal resistance of an insulation product in relation to the transfer of heat is denoted by its "R" Value. The greater the product's resistance, the higher is its "R" Value. The "Material R Value" is the R Value attributable solely to the insulation batt. The "Total R Value" is in effect the sum of the batts "Material R Value" plus the "R Value" attributable to the components of the building structure into which it is installed. The "Total R Value" is therefore greater than the insulation batts' "Material R Value" and will vary depending on the building components of the structure into which it is installed.
**In May 2005 the ACCC accepted an 87B undertaking from Autex. The ACCC's concerns were that prior to May 2004 Autex represented by means of its packaging and promotional material that it supplied polyester insulation batts branded Greenstuf as having a thermal resistance of R3.0, being R3.0m².K/W, which when tested according to the relevant standard disclosed a mean thermal resistance of 1.61m².K/W.
