The Federal Court has ordered Mercedes-Benz Australia/Pacific Pty Ltd (Mercedes-Benz) to pay penalties of $12.5 million for failing to use attention-capturing, high-impact language when communicating with consumers about the compulsory recall of potentially deadly Takata airbags.
Mercedes admitted that it had breached the Australian Consumer Law (ACL) by failing to implement its communication and engagement plan for contacting consumers as required by the Takata Recall Notice when it communicated with some consumers about the Takata recall.
Defective Takata airbags have been associated with about 33 deaths and over 350 injuries globally. In Australia, one person died and another was seriously injured in separate incidents caused by the misdeployment of a Takata airbag.
“We believe the statements made by Mercedes-Benz staff had the potential to give the impression to consumers that the airbag replacement was less urgent than was warranted by the real risks posed by the faulty airbags,” ACCC Deputy Chair Delia Rickard said.
In conversations with 27 consumers, Mercedes-Benz call centre staff described the recall as a ‘precaution’, or said words to the effect that the type of airbags used in Mercedes vehicles had not caused any accidents, injuries or deaths in other manufacturers vehicles, when that was not accurate.
The Takata Recall Notice required vehicle manufacturers to implement a communication and engagement plan for contacting consumers and use appropriately urgent terms to maximise rates of replacements of Takata airbags.
“Given the risks of misdeployment increased over time, we were concerned about the risks of any potential for delay in having these faulty airbags replaced,” Ms Rickard said.
Under the Takata airbag recall, suppliers were required to recall and replace defective Takata airbags by 31 December 2020 and develop and implement a plan to communicate with consumers to maximise replacement of these airbags.
“The faulty Takata airbags have the potential to misdeploy and send sharp metal fragments into the vehicle cabin at high speed, which could kill or seriously injure the occupants,” Ms Rickard said.
“The faulty Takata airbags were a potentially deadly issue, and it was vital for the safety of Australian drivers and passengers that manufacturers took the risks seriously, and clearly communicated the risks to consumers.”
“This is the first time a company has been penalised for failing to comply with a mandatory recall notice. This judgment sends a strong signal that companies must comply with their product safety obligations under the ACL.”
Mercedes-Benz has also provided a court-enforceable undertaking, which has been accepted by the ACCC, to conduct a product-safety compliance program about product safety obligations, including mandatory recalls. A copy of the undertaking can be found at Mercedes-Benz Australia/Pacific Pty Ltd.
The orders follow admissions made by Mercedes-Benz and joint submissions by the ACCC and Mercedes-Benz to the Federal Court.
For further information about the cars affected by the recall, consumers can visit Product Safety Australia or contact their manufacturer to check if their vehicle is affected by the compulsory recall.
Note for editors
The Takata airbag recall is the world's largest automotive recall affecting an estimated 100 million vehicles globally. It is the most significant recall in Australian history affecting over 4 million Takata airbags in around 3 million vehicles.
Takata airbags were defective by design, where moisture could permeate the airbag inflator’s casing and degrade the propellant used to inflate the airbag. Over time the risk of pressure building up and the metal casing exploding into the vehicle’s cabin with catastrophic effects, if the airbag was triggered, increased.
Under the Takata recall notice, which was issued by the Assistant Treasurer and came into effect on 1 March 2018, suppliers were required to recall and replace defective Takata airbags by 31 December 2020 and develop and implement a plan to communicate with consumers and maximise replacement of defective Takata airbags.
The Takata Recall Notice applies to Affected Takata Airbag Inflators. These are commonly known as Alpha or Beta (also known as non-Alpha) airbags. Both Alpha and Beta airbags pose a risk of death or injury, with Alpha airbags posing a significantly higher safety risk because they have been shown to rupture more frequently. Mercedes-Benz used beta airbags in the vehicles affected by the Recall Notice.
As of July 2021, car manufacturers have successfully recalled 99.9 per cent of vehicles affected by these airbags.
Expert advice provided to the ACCC, which formed the basis for the compulsory recall, indicates that the risk of a defective Takata airbag rupturing may arise between 6 and 25 years after it is installed in a vehicle. In areas of high heat and humidity, the risk of rupture may arise between 6 and 9 years.
Mercedes-Benz is an importer and wholesaler of passenger cars for the Australia/Pacific region and is owned by parent company Daimler AG, a multinational automotive company.
On 4 August 2021, the ACCC instituted proceedings against Mercedes-Benz for alleged breaches of the ACL in relation to its compliance with the compulsory recall of defective Takata airbags.
The ACCC has previously accepted a court-enforceable undertaking from Mercedes-Benz on 18 February 2020, relating to its failure to initiate the recall of certain affected Mercedes-Benz vehicles under the Recall Notice.