The legal woes of Mercedes-Benz Australia/Pacific Pty Ltd (Mercedes-Benz) have deepened after the Federal Court of Australia ordered that it 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.

The ACCC Deputy Chair Delia Rickard said ‘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.’

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.

Ms Rickard further stated that ‘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.’

The penalties come in the midst of another Federal Court proceeding against Mercedes-Benz in which most of the Mercedes-Benz dealer network is suing Mercedes Benz for changing its dealership model to an ‘agency’ model. The trial of that proceeding is continuing.

This article was written by Evan Stents, Lead Partner, Automotive Industry Group.