24 Apr 2009

False nappy biodegradability claims: company director liable

by Kirsten Webb, Madeleine Kearney

ACCC continues its focus on "green" marketing claims, with a company director found liable for claims and subject to an injunction restraining future conduct

The ACCC quite openly declared its interest in "green"/environmentally friendly claims in February 2008 when it released its guide entitled "Green marketing and the Trade Practices Act", and it seems that this interest continues.

These proceedings between the ACCC and SeNevens International Ltd illustrate the type of enforcement action that the Commission is prepared to take against environmental claims that are misleading and deceptive.

SeNevens (which has now changed its name to Eco Quest Limited) made representations that its Safeties Nature Nappy was "100% biodegradeable". The problem was that the nappies contained plastic components that were not capable of being broken down by the biological activity of living organisms. SeNevens withdrew the product from sale in April 2008 after the ACCC's investigation into the claims.

The Court held that the "100% biodegradeable" claim breached sections 52 and 53 of the Trade Practices Act 1974.

In addition, the Federal Court of Australia declared that a director of SeNevens, Ms Charishma Seneviratne was "knowingly concerned" in the company's misleading conduct. The Court found that she knew that the whole of its Safeties Nature Nappy product was not biodegradable at the time she approved advertising.

Justice Marshall was clearly concerned about the seriousness of the breach. He agreed to consent orders imposing a five year injunction on Ms Seneviratne preventing her from being party to any nappy biodegradability claims without first having received independent scientific testing of the product being promoted.

This case demonstrates the importance of ensuring that any environmental claims made in respect of your product can be substantiated.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.