I always try to keep you current when it comes to important commercial law cases. Today, I’m going to talk about a very currant court case – blackcurrant to be exact (sorry about the seedy beginning).
You have probably heard about the Ribena case, so I won’t go into too many details. The Commerce Commission prosecuted Ribena’s makers, GlaxoSmithKline (GSK), after two Auckland secondary school students tested the vitamin C content for a school science fair project. (Ah! Those were the days – I still have the warm glow from beating the Auckland Grammar School boys to the first prize, all those years ago.) They found that premixed Ribena contained very low levels of vitamin C. How could that be? Ribena advertising has claimed “Blackcurrants in Ribena have four times the vitamin C of oranges” since as far back as I can remember. And it’s true – as far as it goes.
Before they complained to the Commerce Commission, the students contacted Fair Go, who wrote to GSK questioning the vitamin C claims. GSK’s response stood by its claims:
Packaging for premixed Ribena drinks claimed that the product contained 7mg of vitamin C per 100ml: 44 percent of the recommended daily intake.
In fact, Commerce Commission testing showed that premixed Ribena contained no detectable traces of vitamin C. Obviously this label was liable to mislead consumers – and misleading conduct is a breach of the Fair Trading Act 1986. GSK pleaded guilty in relation to the label, and also in relation to the claim that “the blackcurrants in Ribena have four times the vitamin C of oranges”. While this claim in TV ads is literally true, when properly diluted with water, even Ribena cordial (which does have quite a bit of vitamin C) contained only 1.5 times as much as orange juice.
The District Court ordered GSK to pay fines of $227,500, and to undertake corrective newspaper advertising saying that some forms of Ribena contained no detectable vitamin C. You may have seen those ads recently – dripping with grovel. Not a good look for a multinational.
So what about you resellers? You all sell products with specifications that are pretty important to your customers – for example, claims about performance or compatibility with other products. They (and therefore you) need to be pretty sure that the claims are accurate. If they’re not, you’ve got problems, including Fair Trading Act risks.
Now there is a defence in the Fair Trading Act of reasonable reliance on information supplied by a third party – your supplier, usually. But the important word is “reasonable”. If you are relying on your supplier’s testing, be a little suspicious. It might well be reasonable to rely on the testing procedures of a well-known international brand, but if you are dealing with small or unknown (and therefore potentially dodgy) suppliers offshore, it might be reasonable to test in-house to make doubly sure that when a product hits the shelves, what you say about it is accurate. Remember, you’re the expert as far as your customers are concerned. They expect you to have checked it out.
Another point about the GSK case: it’s a classic example of someone telling the truth but still misleading the public – because it wasn’t the whole truth. “Four times the vitamin C of oranges” might have been literally true, but was misleading because it inaccurately suggested that the drink customers bought would have four times the vitamin C of orange juice. Don’t treat your customers like idiots – they might be Auckland schoolgirls! And the real moral of the story: if it’s good enough for customers to open their wallets and pay you money, it’s good enough for you to give them the full story beforehand.
This article is intended for general information, and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at email@example.com.