When too much publicity is bad for your case: Law Reporter

Tuesday, 01 October 2002


    The chorus of business leaders and legislators against the ACCC’s habit of broadly commenting on cases it brings has drawn a warning from the Federal Court.

    One of the critical issues that the Dawson Committee, appointed to review the operation of the competition provisions of the Trade Practices Act, is the question of publicity and governance involving the Australian Competition and Consumer Commission. There has been a lot of criticism leveled at the way in which the ACCC seeks publicity in relation to investigations that it conducts and litigation that it also conducts. The publicity associated with the recent raids on oil company offices, with the ACCC yet to bring any proceedings in relation to them, highlighted the issues very clearly. Justice Paul Finn in the Electricity Supply Association case in 2001 was very critical of the way in which the ACCC publicised its views in relation to certain issues arising under the Trade Practices Act. [Law Reporter, June 2002] Now, Justice Hill of the Federal Court in Cassidy & Anor v Medical Benefits Fund of Australia ([2002] FCA 1097, in a judgment handed down on September 9, was once again critical of publicity involving an allegation made by the ACCC.

    This action arose out of the initiative of the Federal Government to reduce the strain on the public health system by encouraging more Australian to take out private hospital cover. As a result, a number of health funds, including the MBF, embarked on aggressive advertising campaigns seeking new members. The applicant Cassidy, who was the chief executive officer of the ACCC, and the Australian Securities and Investments Commission, which from June 2000 became responsible for the operation of this part of the legislation but which had delegated its powers to Mr Cassidy, sought declarations from the court alleging that the advertising campaign was misleading or deceptive. The allegations were that the MBF would waive all waiting periods in respect of pregnancy and obstetrics for consumers who purchased cover before the June 30 deadline. The MBF challenged the allegations and also argued that the ACCC had been over zealous in the way in which it had publicised the litigation. Justice Hill had some difficulty in determining whether the advertising was misleading and deceptive. In his view, whilst the newspaper advertising was not misleading or deceptive, the television advertising gave the overall impression of false advertising. Similarly, in relation to the billboard advertising he also ruled that the advertising was misleading and deceptive.

    Injunctions were sought against the MBF in relation to the advertising but the judge found that the MBF had instituted "an extensive compliance program and that an order in the terms sought [by the ACCC] would not be of real utility" and therefore refused to grant the relief. The ACCC also sought orders that the MBF screen, at its own expense, certain corrective advertising in relation to the misleading advertising. His Honour said the case was not one in which it was appropriate to order the MBF to make good the representation by sending letters to those people who had joined the fund. The other question was whether he should also order corrective advertising. On the whole, he felt that some corrective advertising was warranted. Orders were also sought against the advertising agency involved in the campaign. The judge refused to order the agency to advise all members of the Advertising Federation of Australia that it had been at fault in relation to the advertising. "Rather it would seem directed at punishing the agency by reporting to its peers and announcing a win for the applicants," he said, and added that such an order would not assist in informing the public.

    The judge sounded an important warning to the ACCC about its use of publicity in support of its actions. He said: "My attention was drawn to a speech given by Professor Fels the Chairman of the [ACCC] to the members of the Advertising Federation of Australia in which Professor Fels made specific reference to the present case noting that [the ACCC] was seeking orders against the John Bevans agency. There was also an article, apparently written by Professor Fels in [an edition of the Business Review Weekly] which made reference to the fact that the proceedings against the [advertising agency] were on the basis that it was knowingly involved in false and misleading and deceptive advertising of health insurance. It might be said that while [the ACCC] is entitled to tell the public that proceedings have been brought and the general nature of those proceedings, there is a danger that wide dissemination of the facts before a hearing might in a particular case injure, perhaps irreparably, the person against whom the proceedings are brought."

    It will be interesting to see what the Dawson Committee makes of this decision, when considered with the decision of Justice Finn in the Electricity Supply Association case which was also critical of the use of publicity by the ACCC.


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