Predicting the future for “green” claims: The Australian Full Federal Court provides guidance on representations as to future matters

Marketing products as ‘environmentally friendly’ is an increasingly popular way for businesses to capture consumer attention. As the popularity of such ‘green’ marketing claims has increased, so has the ACCC’s scrutiny of these claims.

In two recent decisions in cases commenced by the ACCC in relation to ‘green’ marketing claims, the Federal Court has provided guidance as to when marketing claims will be considered a ‘representation with respect to a future matter’ under section 4 of the Australian Consumer Law (ACL) and when a claim will be a representation as to a product’s inherent characteristics. This matters, because for a representation with respect to a future matter, the Court will assess whether there were reasonable grounds for making such a representation. In Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) [2020] FCAFC 162, the Full Federal Court recently upheld the decision of the Federal Court that representations as to the biodegradability and compostability of Woolworths ‘Select Eco’ product range were not misleading or deceptive. This decision followed hot on the heels of the Full Court’s decision in Australian Competition and Consumer Commission v Kimberly-Clark Australia Pty Ltd [2020] FCAFC 107, upholding that claims that certain wipes were ‘flushable’ were also not misleading or deceptive.

Although the ACCC failed to establish that the claims at issue in both cases were representations with respect to future matters, the ACCC is likely to continue to pay close attention to ‘green’ marketing claims in the future. These decisions also highlight the role that section 4 of the ACL will continue to have in relation to representations that relate to future predictions, including regarding performance and results. This is likely to be particularly relevant to health and therapeutic claims, business performance and financial products (which may also be subject to oversight by other regulators (e.g. the TGA or ASIC)).

KEY TAKEAWAYS

• Whether a representation is one ‘with respect to a future matter’ will depend on the words used and the context. However, generally speaking, where a claim is not capable of being proved true or false at the time it is made (because it lies in the future), it will be considered a representation with respect to a future matter. Examples of this include predictions, promises, forecasts and opinions as to future events.
• In contrast, representations as to the nature, quality, character or capability of a product based upon its inherent characteristics will generally not be representations with respect to a future matter.
• Where representations are predictive in nature, businesses should ensure that there are reasonable grounds for making the claim. This may require evidence that a business evaluated and relied on relevant information prior to making a representation. In light of this, businesses should ensure adequate record keeping policies and practices are in place in relation to evidence to support the claim being made and the decision-making process.
• ‘Green’ marketing claims, as well as health and nutritional claims, are examples of types of claims that have the potential to involve representations as to future matters. These types of marketing claims continue to be popular and effective, and as a result, also continue to attract close scrutiny from regulators such as the ACCC, as well as competitors. The ACCC specifically identified health and nutritional claims as a priority focus for 2020.

For further detail, please see our full article here.