ACCC mulches "green" claims

By Philippa Hore.

Key Points:

Businesses claiming that their products have environmental benefits should carefully consider whether those claims are sustainable, given the recent outcome of an ACCC investigation into claims made by air conditioner importer and distributor Daikin.

Background

From January 2001 to August 2003, Daikin represented in sales brochures and on its website that certain refrigerants and Daikin air conditioning units containing those refrigerants were environmentally friendly, and that their use by consumers would prevent (or at least not contribute to) global warming.

The ACCC investigates

The ACCC investigated Daikin's representations. After seeking expert scientific advice, it considered that the representations were misleading and contravened the Trade Practices Act 1974, given that the refrigerants in question are in fact potent greenhouse gases with significant global warming potential.

As a result of the ACCC's investigation, Daikin has provided a court enforceable undertaking that it will:

• not make the representations for a period of five years;
• place a corrective notice on its website;
• write and distribute corrective letters to its distributors and to the Australian Airconditioning and Refrigeration Manufacturers Association;
• implement a corporate trade practices compliance program, including staff training seminars; and
• advise its Japanese parent company about the existence and content of the undertaking and about the existence and outcomes of the trade practices compliance program.

The content of the corrective letters is set out in Daikin's undertaking, and includes the following statement:

"Daikin wishes to draw to your attention that the … refrigerants … are greenhouse gases, which will contribute to global warming if released into the atmosphere. As such, they will not benefit the environment … Daikin apologises to its customers for any misunderstandings caused by these representations which were made in sales literature produced in Japan for the global market"

Daikin also acknowledges in its undertaking that the ACCC will make the undertaking available for public inspection and that the ACCC will, from time to time, refer publicly to that undertaking.

Lessons to be learnt

Clearly, the main lesson from the Daikin case is that businesses must ensure the accuracy of any claims made about the environmental benefits of their products and services. As ACCC Chairman Graeme Samuel said:

"In light of the ACCC's investigation of Daikin and other air conditioning manufacturers concerning misleading environmental representations, extra care should be taken by businesses intending to promote environmental aspects of their products or services to accurately specify the environmental benefits claimed. Businesses should be wary of making broad generalisations about the environmental benefits of their products."

The Daikin case also holds another important lesson for businesses that use promotional material supplied by parent companies or related bodies corporate in other jurisdictions. Daikin states in its corrective letter that the representations investigated by the ACCC in this case were taken from sales literature produced in Japan for the global market. If you use content sourced from other jurisdictions, make sure it’s checked for compliance with Australian legal and regulatory requirements before being used here. In particular, you should confirm the truth of all claims made in material sourced offshore.

For further information, please contact Philippa Hore.