The ACCC makes good on its promise to target the funeral sector, as funeral businesses are penalised for alleged false or misleading statements about their ownership

The ACCC made it clear at the start of 2021 that it would be monitoring and investigating the funeral sector for any unconscionable conduct or anti-competitive behaviour. Two weeks ago, it made good on its claims, issuing penalties against two funeral homes for alleged false or misleading representations, and opening up a survey seeking submissions from businesses and the general public on their experiences with, and within, the funeral services industry.

Funeral businesses ought to carefully navigate the upcoming year in response to the swift action taken by the ACCC, and should seek legal advice to ensure that they are not contravening the Australian Consumer Law¹ (ACL) through their business practices or marketing materials (including web content).

This article will examine the latest updates on the ACCC’s investigation into the funeral sector, and will provide some key takeaways for funeral businesses to consider.

ACCC 2021 compliance & enforcement priorities

In February, the ACCC announced its compliance and enforcement priorities for 2021 (ACCC Priorities), which we discussed in detail in a previous article.²

The ACCC Priorities clearly expressed the ACCC’s intention to examine the funeral sector for any unconscionable conduct or anti-competitive behaviour. The ACCC noted specifically that it would be exploring criticisms made about funeral businesses (including that major funeral businesses use their market power to bundle services and prevent other businesses from entering the market) and would take targeted action where required.³

Infringement notices awarded to funeral homes

True to its word, two weeks ago the ACCC announced that it had issued infringement notices to WT Howard Funeral Services (WT Howard) and Coventry Funeral Homes (trading as Fitzgerald’s Funerals) (Coventry). The ACCC alleged that WT Howard and Coventry had both made false or misleading representations in contravention of the ACL, and issued each with a $12,600.00 penalty.⁴ 

The ACCC noted in its media release that both funeral businesses had made representations on their websites about being ‘locally owned’. WT Howard had promoted that it was a “proudly local and independently owned” business, while Coventry had represented that it was “locally owned and operated’. In actual fact, both WT Howard and Coventry were (and are) owned by Propel Funeral Partners (Propel), a publicly-listed entity with over 130 funeral homes across Australia and New Zealand. Propel had acquired WT Howard in 2015, and Coventry in 2019, but both businesses had failed to reflect this change in ownership on their website and in their marketing communications.

The ACCC’s entitlement to issue infringement notices arises under section 134A of the Competition and Consumer Act 2010 (Cth) (CCA), which allows it to issue an infringement notice where it has reasonable grounds to believe that a person or business has contravened certain consumer protection laws, including Part 3-1 of the ACL.⁵ The payment of this penalty, however, does not amount to an admission by the relevant business of the conduct alleged by the ACCC in the infringement notice, nor does it amount to a finding that the business has contravened the CCA.⁶ 

While the ACCC did not specify in the media release which section of the ACL it relied upon in issuing infringement notices to WT Howard and Coventry, the following sections of the ACL may have been taken into consideration:

• Section 29(1)(h) of Part 3-1 of the ACL, which directs that a person must not, in trade or commerce, in connection with the supply or promotion of goods or services, make a false or misleading representation that the person making the representation has sponsorship, approval or affiliation; or
• Section 29(1)(k) of Part 3-1 of the ACL, which directs that a person must not, in trade or commerce, in connection with the supply or promotion of goods or services, make a false or misleading representation concerning the place of origin of goods.

It is worth noting that this compliance action comes after the ACCC’s enforcement action against Kimberly-Clark Australia Pty Ltd (KCA), which concluded in the Federal Court in February of this year.⁷ In these proceedings, the ACCC alleged that KCA (the makers of Kleenex Cottonelle toilet paper products) made false or misleading representations about the country of manufacture of certain products via a ‘Made in Australia’ logo. The importance of accurate and truthful country of origin claims is made clear in ACCC literature, which states that consumers, in acquiring goods, may be influenced by representations about where a product was grown, made or produced.⁸

ACCC survey

To coincide with its announcement of the compliance action taken against WT Howard and Coventry, the ACCC opened up a Funeral Services Survey (Survey), seeking submissions from people who work in the funeral services industry, who have information about the funeral services industry or who have personal experiences in arranging a funeral. The Survey, which is set to close on 16 April 2021, is likely to attract many submissions and unveil any untoward practices that are currently occurring in the funeral sector.

Takeaways for businesses

1. The ACCC is making good on its priorities for 2021 and the funeral sector is clearly on the radar. Funeral businesses should remain vigilant in the upcoming year and should take any ACCC investigation or action very seriously, especially considering the significant penalties that the ACCC may now impose for a breach of the ACL.⁹
2. Funeral businesses should manage any exposure by seeking legal advice on their business practices and a review of their contracts, web content and marketing materials, to ensure that their operations are ACL compliant.
3. Upon becoming aware of any ACCC investigation or action, businesses should seek urgent legal advice. The actions taken by a business after it receives notice from the regulator can have an impact on the ultimate penalty imposed, with prompt action and cooperation looked at favourably by the ACCC.¹⁰

We have a dedicated consumer law team that can help you review your contracts, marketing materials, website content and business practices to ensure that you comply with the ACL. If you would like more information about the services that we provide, please contact us.

This article was written by Teresa Torcasio, Partner, Caitlyn White, Senior Associate and Zoe Vise, Solicitor.

¹ Competition and Consumer Act 2010 (Cth) (‘CCA’) sch 2 (‘Australian Consumer Law’) or (‘ACL’).
² Teresa Torcasio et al, ‘The ACCC Compliance and Enforcement Priorities for 2021 – a look back at the year that was, the impact of COVID-19, and the businesses most at risk for enforcement action in 2021’, HWL Ebsworth Lawyers (4 March 2021) <https://hwlebsworth.com.au/the-accc-compliance-and-enforcement-priorities-for-2021-a-look-back-at-the-year-that-was-the-impact-of-covid-19-and-the-businesses-most-at-risk-for-enforcement-action-in-2021/>.
³ Australian Competition & Consumer Commission (ACCC) (Cth), ACCC 2021 Compliance and Enforcement Priorities, Annual Address to Committee for Economic Development Australia (23 February 2021), item 2, paragraph 5.
⁴ ACCC, ‘Two Propel-owned funeral homes pay penalties for alleged misleading local ownership claims’ (Media Release, 17 March 2021 <https://www.accc.gov.au/media-release/two-propel-owned-funeral-homes-pay-penalties-for-alleged-misleading-local-ownership-claims>.
⁵ CCA, s134A.
⁶ Australian Competition and Consumer Commission (Cth), Infringement Notices – Guidelines on the use of infringement notices by the Australian Competition and Consumer Commission (2020).
⁷ Teresa Torcasio et al, ‘Kleenex ordered to ‘clean up’ the claims made on its website – a warning to businesses to carefully review their marketing content for compliance with the ACL’ HWL Ebsworth Lawyers (1 March 2021) (‘Kleenex Article’) <https://hwlebsworth.com.au/kleenex-ordered-to-clean-up-the-claims-made-on-its-website-a-warning-to-businesses-to-carefully-review-their-marketing-content-for-compliance-with-the-acl/>.
⁸  Australian Competition and Consumer Commission, ‘Country of origin claims’ <https://www.accc.gov.au/business/advertising-promoting-your-business/country-of-origin-claims>.
⁹ Teresa Torcasio and Marian Ngo, ‘Breaches of the Australian Consumer Law attract a record breaking $26.5 million penalty’, HWL Ebsworth Lawyers (9 October 2019) <https://hwlebsworth.com.au/breaches-of-the-australian-consumer-law-attract-a-record-breaking-26-5-million-penalty/>.
¹⁰ Kleenex Article (n7), paragraphs 9 – 11.