The Federal Court has fined Dimmeys Stores Pty Ltd $160,000 for supplying children's nightwear which failed to comply with the mandatory consumer product safety standards for children's nightwear.
The orders follow criminal proceedings instituted by the Australian Competition and Consumer Commission against Dimmeys for contravening the product safety provisions of the Trade Practices Act 1974. The breaches related to six charges concerning the supply of children's nightwear in Townsville in July 2000 and one further charge for the supply of children's nightwear in Melbourne in November 2000.
The ACCC had alleged that in July 2000, Dimmeys, at its Townsville store, illegally supplied six styles of children's nightwear ranging from long and short sleeved pyjamas to girls' nighties. It was alleged that the garments did not carry the appropriate fire hazard information labels as required under the mandatory consumer product safety standard. In fact the majority of the garment styles had no fire hazard information label attached at all.
The fire hazard information labels required under the mandatory standard must use certain words to reflect the level of fire danger of the garments. For example, garments which are of high fire danger must use the words "WARNING HIGH FIRE DANGER KEEP AWAY FROM FIRE" and must use a designated warning logo.
The Townsville contraventions were identified by ACCC staff after conducting regular surveys of retail stores. The contraventions were immediately raised with Dimmeys who were asked to and did undertake a public recall at that time.
However further surveys undertaken by ACCC staff in Melbourne in November 2000 revealed that similar garments to one of the styles supplied in Townsville were then on sale in a Dimmeys Melbourne store without any fire hazard information labels. Again, the issues were immediately raised with Dimmeys who agreed to take further recall action in both Victoria and Queensland.
In his reasons for judgment Justice Drummond stated that:" The fact that so soon after the Commission's complaints in July 2000, the Dimmeys Stores in Richmond could have on display not only children's nightwear that did not comply with the labelling requirements of the Standards, but non-complying garments carrying the same brand "Just Dreaming" as the garments displayed a little earlier in Townsville is eloquent evidence of the quality of the effort Dimmeys' senior management put into dealing with an onerous but essential requirement of the regulatory regime in which it has to operate prior to November 2000".
Dimmeys pleaded guilty to the seven charges.
The fines of $160,000 are the highest ever total under the product safety provisions of the Act and included the highest fine for an individual charge of $100,000 for the Melbourne charge.
"The Court has sent a clear and strong message that the product safety provisions are paramount", ACCC Chairman, Professor Allan Fels, said today.
The Court also indicated that a discount of one third was given to the fines that the Court might otherwise have imposed and related to factors including the fact that Dimmeys pleaded guilty and that they did not obstruct the Commission's investigations.
In addition to fines, the Court imposed an injunction: "which will operate for a substantial future period of time, not only to mark the Court's disapproval of the defendant's conduct but also to act as an additional deterrent to further similar offences".
Justice Drummond also ordered that Dimmeys implement a trade practices compliance program. Dimmeys must also pay the ACCC's costs of the entire action.
"While Dimmeys had undertaken recall action after the breaches were identified by ACCC staff, Dimmeys were remiss in allowing similar garments to be supplied again in Melbourne", Professor Fels said. "It is also of concern that this action followed after Dimmeys were found guilty in 1999 for product safety breaches in relation to faulty children's bicycles and fined $60,000.
"The ACCC will continue to take strong enforcement action on product safety issues, particularly where the safety of children is involved.
"This case sends a strong message to all suppliers, but especially to discount variety store companies. Stores must take responsibility for ensuring the safety of the goods they sell and that any mandatory safety standards are observed.
"This should include a comprehensive trade practices compliance program which puts in place steps and measures to prevent faulty goods from being supplied to the public. Any program should also ensure that when problems are identified, immediate recall action is taken and procedures followed to remove the items from sale".
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