The Federal Court in Melbourne has imposed penalties totalling $400,000 against Dimmeys Stores Pty Ltd for supplying children's dressing gowns which failed to comply with the mandatory consumer product safety standard for children's nightwear.
"This outcome is significant because it is the first civil penalty handed down for a breach of a product safety standard," Australian Competition and Consumer Commission chairman Graeme Samuel said.
Under Australian Consumer Law amendments which commenced on 15 April 2010, the ACCC can seek in civil proceedings penalties of up to $1.1 million against corporations and $220 000 against individuals for a contravention of various consumer protection provisions of the Competition and Consumer Act 2010. This includes a section relating to prescribed consumer product safety standards.
"This case sends a strong message to all suppliers that they risk substantial penalties if they supply products which do not comply with prescribed product safety standards," Mr Samuel said.
The penalties (payable in three instalments over three years) follow civil penalty proceedings instituted by the ACCC against Dimmeys for contravening section 65C(1) of the Trade Practices Act 1974*.
The ACCC had alleged that in May and June 2010 Dimmeys sold children's dressing gowns which did not carry any fire hazard warning label as required by the standard. It was further alleged that between April 2009 and August 2010 Dimmeys sold dressing gowns which did not have their fire hazard warning label attached in the correct position in accordance with the standard.
The ACCC enforces a mandatory standard for the labelling of children's nightwear which is designed to reduce the risk of burn injuries to children by providing specific information on the fire hazard of relevant garments.
"The children's nightwear standard is extremely important because it concerns the safety of young children," Mr Samuel said. "Partial compliance is not an option for suppliers."
Justice Gordon imposed a total penalty of $400 000 comprised of:
- $300,000 for the contraventions relating to the sale of the dressing gowns that did not carry any fire hazard warning label; and
- $100,000 for the contraventions relating to the sales after 14 April 2010 of the dressing gowns that had their fire hazard warning label in the incorrect position.
The court also declared that Dimmeys contravened section 65C(1) of the Act and ordered that Dimmeys:
- be restrained for a period of five years from supplying children's nightwear which does not comply with the standard
- implement a trade practices compliance program, and
- pay the ACCC's agreed costs of $60,000.
"It is concerning that this action follows fines imposed on Dimmeys for previous breaches of product safety standards," Mr Samuel said.
"In 2001 Dimmeys was fined $160,000 for breaches in relation to selling children's nightwear that did not comply with the standard. In 1999 Dimmeys was fined $60,000 for product safety breaches in relation to the sale of children's bicycles."
"It is imperative that suppliers have in place a compliance program which incorporates appropriate procedures to ensure that the products they supply comply with prescribed consumer product safety standards," Mr Samuel said.
Dimmeys' conduct was detected by ACCC staff during one of the ACCC's product safety survey exercises which are conducted on a regular basis. Dimmeys voluntarily recalled the dressing gowns after being approached by the ACCC. Dimmeys also admitted the contravening conduct and agreed to all orders sought other than the amount of the penalty.
For more information on product safety, including a full list of mandatory product safety standards and bans, visit www.productsafety.gov.au. You can also follow product safety at the ACCC on twitter (@ProductSafetyAU) for the latest product safety news.
*On 1 January 2011 as part of the Australian Consumer Law amendments, the Trade Practices Act 1974 was renamed the Competition and Consumer Act 2010.
Section 65C(1) of the Act prohibits a corporation in trade or commerce from supplying goods that are intended to be used, or are of a kind likely to be used, by a consumer if the goods are of a kind in respect of which there is a prescribed consumer product safety standard and which do not comply with that standard.