On 15 June 2020, the Full Federal Court upheld the finding that Kimberly-Clark Australia Pty Ltd (KCA), the makers of Kleenex Cottonelle Toilet Wipes (KCA Wipes), did not make false or misleading claims that KCA Wipes were flushable. This comes in response to an appeal by the Australian Competition and Consumer Commission (ACCC) which alleged that the Federal Court had erred on several grounds.
Background
In December 2016, the ACCC commenced proceedings against the makers of two types of toilet wipes – KCA and Pental Products Pty Ltd (Pental). The claims were that both companies had made false and misleading representations about their wipe products, in contravention of sections 18, 29 and 33 of the Australian Consumer Law (ACL).3 The ACCC alleged that while KCA and Pental represented their toilet wipes as ‘fit for flushing’, they were in fact not. While Pental conceded to these allegations (being ordered to pay a penalty of $700,000), KCA did not.
The matter between KCA and the ACCC went to the Federal Court in June 2019, which found in favour of KCA. The court held that KCA’s claim that KCA Wipes were flushable was not a false or misleading claim, as while the wipes did not break down and disperse in the same way as toilet paper, this inferior form of breakdown did not actually create any risk of harm or blockage in households and sewerage systems.
The Full Federal Court emphasised the point made at trial that the KCA Wipes had passed certain tests of ‘flushability’ according to the industry guidelines of the International Nonwovens and Disposables Association and the European Disposables and Nonwovens Association (collectively Guidelines). At trial, this was seen as a ‘conscientious and scientific effort’ on the part of KCA to establish that the wipes were ‘flushable’ as represented. It was said that the representation of ‘flushability’ was not an expression of a future matter, but rather a characteristic of the wipes themselves.
For full details of the background court proceedings refer to our previous article here.
Full Federal Court proceedings
The ACCC appealed to the Full Federal Court on a number of grounds. On Monday 15 June 2020, the court dismissed all of these grounds of appeal.
Ground 1: The test applied
The ACCC argued that the primary judge erred in applying the test of ‘proof of actual harm’, and that the correct test to be used was ‘risk of harm’ to determine whether the flushable representation made by KCA was false or misleading. The Full Federal Court rejected this argument, noting that at trial the ACCC had only argued that the KCA Wipes created ‘actual harm’ to sewerage systems, and could not now alter its argument on appeal. Secondly, the Full Federal Court said that the primary judge had already addressed the risk of harm of KCA Wipes and had concluded that they created no more risk than ordinary toilet paper.4
Grounds 2 and 3: The harm caused
The ACCC further alleged that the primary judge had erred in finding that KCA Wipes did not represent a greater risk of harm than toilet paper, and that they did not cause or contribute to any harm caused to household plumbing or to the municipal sewerage network. The Full Federal Court disagreed, noting that the primary judge’s reasoning was ‘unremarkable’ and ‘sound’. The court further pointed to the fact that the ACCC’s evidence in reliance of this ground was ‘directed to problems caused by wipes generally, rather than the [KCA Wipes]’ specifically, and that ‘each of the witnesses referred to… gave evidence which did not distinguish between [KCA Wipes] and wipes generally when observing that wipes caused blockages’. In the court’s opinion, this evidence ‘amply demonstrated’ that wipes caused blockages, but not that KCA Wipes caused blockages.5
Ground 4: The consumer complaints
The ACCC also argued that more emphasis should have been placed on the evidence of consumer complaints about KCA Wipes, as proof that they were not fit for flushing. The Full Federal Court rejected this argument, noting that such complaints were few and far between, and only portrayed information chosen to be conveyed by a consumer.6
Ground 5: The Guidelines
The ACCC argued that the Guidelines were not an appropriate framework by which to assess the suitability of KCA Wipes, given that the scientists who contributed to the Guidelines were employees of the manufacturer which sought to rely on them. The ACCC thus alleged that the primary judge had erred in applying them, considering the possible lack of impartiality. The Full Federal Court dismissed this argument, noting that this fact was acknowledged by the primary judge, who had still found that the Guidelines were an appropriate standard.7
Ground 6: The unpublished results
The ACCC argued that the trial judge had erred in making the ‘impermissible’ inference that because the ACCC had not tendered the unpublished results of certain studies conducted by members of Water Services Association of Australia, that these studies would not have assisted the Commission’s claim. This was dismissed by the Full Federal Court, which said that this finding was not material to the ultimate decision and would not have affected the finding that the KCA Wipes caused no harm.8
Grounds 7 and 8: The comparison to toilet paper
Finally, the ACCC argued that more weight should have been placed on representations made about KCA Wipes which likened them to toilet paper. This included a written representation that KCA Wipes would ‘break up… like toilet paper’ and a pictorial representation that depicted KCA Wipes as essentially the same as a roll of toilet paper. This too was dismissed by the Full Federal Court, which noted that both representations were flagged by qualifying statements which would lead a ‘reasonable consumer’ to understand that KCA Wipes were not identical to toilet paper. For example, the representation that KCA Wipes would break down like toilet paper also came with a warning not to flush more than two at once.9
Key takeaways from the Federal Court and Full Federal Court
Suppliers of products must be mindful of their obligations under section 18, 29 and 33 of the ACL when making any claims about their products. These sections prohibit:
- Misleading or deceptive conduct;10
- False or misleading representations about goods or services, including in relation to the quality, standard, value or grade of the goods or services;11 and
- Conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics or suitability for the purpose of the goods.12
Suppliers should rigorously test whether they can support the claims made in relation to their goods and services. In the case of KCA, the Federal Court and Full Federal Court were heavily influenced by the fact that KCA Wipes not only excelled in meeting the minimum threshold of the Guidelines, but that KCA had performed additional testing on KCA products and did not just confine this testing to the Guidelines.
This article was written by Teresa Torcasio, Partner, Chantelle Radwan, Solicitor and Zoe Vise, Law Graduate.
1. Australian Competition and Consumer Commission v Kimberly-Clark Australia Pty Ltd [2020] FCAFC 107 (‘Kimberly Clark FFC’)
2.Australian Competition and Consumer Commission v Kimberly-Clark Australia Pty Ltd [2019] FCA 992.
3. Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’).
4. Kimberly Clark FFC n 1, [17] – [44].
5. Ibid, [46] – [60].
6. Ibid, [62] – [71].
7. Ibid, [72] – [81].
8. Ibid, [82] – [84].
9. Ibid, [85] – [95].
10. Australian Consumer Law, s 18.
11. Ibid, s 29.
12. Ibid, s 33.
