False labelling and misleading information: Federal Court fines Tamar Knitting Mills

The Federal Court, Hobart has imposed a $50,000 fine on Tasmanian knitwear company GIA Pty Ltd (in liquidation), which traded as Tamar Knitting Mills, for falsely representing that Chinese-made polo shirts supplied by Tamar over a 12-month period were made in Tasmania by Tamar.

The court imposed a $4,000 fine on former Tamar managing director, Mr Eric Ian Thompson, for having been knowingly concerned in the company's contravention.

The criminal proceedings were prosecuted on behalf of the Australian Competition and Consumer Commission by the Commonwealth Director of Public Prosecutions.

The court also fined Tamar $5,000 for knowingly providing false and misleading information to the ACCC in response to a statutory notice issued by the ACCC to Tamar. The court fined Mr Thompson $1,000 for being directly or knowingly concerned in the provision of the false and misleading information to the ACCC.

The Court found that after purchasing Chinese made polo shirts from an importer, Tamar removed the original collar label on each polo shirt which stated that the polo shirt was made in China, substituted a 'Tamar' collar label, and attached a swing tag to each polo shirt falsely representing that the polo shirt was 'Tasmanian' or was 'Made in Tasmania by Tamar Knitting Mills'. Tamar then sold the polo shirts between April 1999 and April 2000 to the public through the company's retail outlet in Launceston and via mail order to Lions Club members throughout Australia. The court found that at least 400 polo shirts were supplied with the false labelling.

In imposing penalties on Tamar and Mr Thompson for the place of origin misrepresentations, Justice Heerey stated: "I regard the conduct constituting this offence as deplorable. There was deliberate and dishonest conduct designed to trick consumers. It was conduct that went on for a substantial time and might have continued indefinitely if not accidentally discovered.

"Public deterrence of such unpardonable commercial conduct calls for a penalty of $50,000 on the company".

Justice Heerey also commented in his judgment that he would have imposed a substantially greater fine on Mr Thompson had it not been for Mr Thompson's personal circumstances. Mr Thompson is 66 years old, retired and of limited financial means.

Justice Heerey stated that the provision of false or misleading information in response to a section 155 notice is a serious offence as it hinders and obstructs the administration of the Trade Practices Act 1974, and thus the protection of consumers and the interests of fair trading.

ACCC Acting Chairman, Mr Sitesh Bhojani welcomed the decision by the Federal Court.

"This case is a further reminder that the ACCC and the courts will not tolerate the making of false or misleading statements concerning the origin of products.

"Many consumers make a deliberate decision to buy what they believe are Australian made products in preference to buying similar imported products.

"It is also important to protect honest Australian companies who abide by the place of origin provisions in the Trade Practices Act and can be unfairly commercially disadvantaged by less honest competitors falsely claiming Australian origin".

Regarding the misleading information provided to the ACCC by Tamar, Mr Bhojani said: "The seeking of specific information and documents via notices issued under the Trade Practices Act is an important element in the ACCC's investigative armoury. The ACCC treats very seriously any attempts by companies and individuals to deflect an ACCC investigation by knowingly furnishing false or misleading information".

The defendants were ordered to pay the ACCC's costs.

Section 53(eb) of the Trade Practices Act prohibits corporations from making false or misleading representations concerning the place of origin of goods.

In the course of an investigation into potential contraventions of the Act, the ACCC may issue a section 155 notice requiring the recipient to provide the ACCC with specified information or documents. Section 155(5) of the Act prohibits the provision of false or misleading information to the ACCC in purported compliance with a statutory notice issued by the ACCC.