The fine given to Reckitt Benckiser, the company behind the popular pain relief pills Nurofen, for misleading consumers with “targeted pain” products, has been increased to a record $6 million.
The Federal Court upheld an appeal by the Australian Competition and Consumer Commission (ACCC) today against the $1.7 million penalty imposed in April this year. The increased fine is the highest corporate penalty awarded for misleading conduct under the Australian Consumer Law.
The ACCC had originally sought a $6 million penalty after launching legal action in 2015 over Nurofen’s ‘Back Pain’, ‘Period Pain’, ‘Migraine Pain’ and ‘Tension Headache’ pills, which were identical, with the same active ingredient, and no more effective at treating different types of specific pain.
In December 2015, the Federal Court found Reckitt Benckiser engaged in misleading or deceptive conduct between 2011 and 2015 over the “specific pain” pills
But trial judge justice Edelman ignored the ACCC’s submission for a $6 million penalty as “a strong deterrence message”, concluding that while consumers potentially suffered financial loss due to the price premium, the product still worked.
The ACCC appealed the decision May and today had a major victory.
The court’s full bench of justices Jagot, Yates and Bromwich concluded that the initial penalty of $1.7 million was “manifestly inadequate” in terms of deterrence and the consumer loss suffered.
“The objective of any penalty in this case must be to ensure that Reckitt Benckiser and other ‘would-be wrongdoers’ think twice and decide not to act against the strong public interest,” their judgment says.
ACCC chairman Rod Sims welcomed the decision saying “a penalty of $6 million or higher was appropriate given the longstanding and widespread nature of the conduct, and the substantial sales and profit that was made”.
“The ACCC will continue to advocate for higher penalties for breaches of Australia’s consumer laws to ensure that they act as an effective deterrent and are not simply viewed as a cost of doing business,” he said.
The latest fine comes more than three years after the ABC consumer affairs show “The Checkout” flagged this issue, with presenter Julian Morrow saying consumer paid 70% more for the “targeted” product “for exactly the same results”.
“The only difference between any of these is the price,” Morrow said.
Watch the clip here:
The Nurofen specific pain range was given a “Shonky” Award by Choice back in 2010.
Nurofen says it did not set out to mislead consumers.
Business Insider Emails & Alerts
Site highlights each day to your inbox.