The Full Court of the Federal Court has rejected the appeal by the Australian Competition and Consumer Commission (“ACCC”) in its unsuccessful case against Kimberly-Clark (“K C”), where the ACCC claimed that K-C had made misrepresentations about its “flushable” wipes.

Facts
K-C made wipes (moist towelettes) from fibres that were hydroentangled, or blasted by fine jets of water so as to bond the fibres together. K-C designed the wipes so that they could break down with agitation in water, such as when the wipes passed through the sewerage system.

K-C labelled the wipes with terms such as “flushable” and “safe to flush”. In one instance, K C stated that the wipes “will break up in the sewerage or septic system like toilet paper”. However, this last statement was immediately clarified by saying that in extreme cases just one sheet could plug a toilet. K-C went on to make recommendations as to use, including not to flush more than two sheets at a time.

The ACCC claimed that these statements were misleading because, it said, the K-C wipes caused, or contributed to, harm to household plumbing and public sewerage systems by causing blockages.

The trial judge held that K-C had not made misrepresentations. This was essentially because the ACCC had not been able to prove that K-C’s wipes caused, or contributed to, any harm to sewerage systems, or even presented a materially greater risk of harm than toilet paper (which was accepted as “flushable”).

Appeal
The ACCC appealed this decision but was unsuccessful. The Full Court held that the trial judge had not made any errors and had properly considered the various arguments made by the ACCC.

Much of the evidence at trial showed problems caused by wipes generally (that were not supposed to be flushable) rather than identifying any damage caused by wipes that were designed to be flushable, such as K C’s wipes. The Full Court noted that even toilet paper can cause blockages.

K-C had argued that its flushability claims were supported by the fact that its wipes passed the tests of the INDA/EDANA GD3 Guidelines. These were tests of flushability that had been developed by industry. The ACCC strongly disputed the legitimacy of these Guidelines, but the Full Court held that the trial judge was correct to accept the Guidelines as a reasonable benchmark for making a claim of flushability, in the absence of substantial evidence that the K-C wipes caused harm.

The trial judge accepted that K-C’s wipes did not break down as easily as toilet paper but there was insufficient proof of harm. The Full Court held that where K-C had stated that its wipes would break up “like toilet paper”, the fact that K-C had immediately qualified this statement was sufficient to prevent any misrepresentation.

Too late to change case
In the appeal the ACCC argued that the K-C wipes were not suitable for flushing down the toilet because there was a real risk that they could cause harm. The Full Court rejected this argument because this was not how the ACCC had run its case during the trial. Rather, the ACCC’s claims against K-C were made on the basis that the wipes caused actual harm (which it failed to prove). The Full Court noted that, if the ACCC had relied on the lower standard of “real risk of harm”, K-C might have introduced different evidence to defend this different claim. It was now too late for the ACCC to try to change its case.

There was also a late suggestion by the ACCC that K-C’s wipes could harm septic systems. Again, the Full Court rejected this argument because it was too late – the ACCC had run its case on the basis that harm was caused to sewerage systems, not septic systems.

Implications
This decision is helpful to suppliers of wipes that are designed to be flushable, but it is limited to its facts – to the case that the ACCC was trying to prove. Importantly, however, the Full Court approved the trial judge’s acceptance of the INDA/EDANA GD3 Guidelines as to flushability, provided that there is no evidence of actual harm caused by the wipes in question.

The ACCC was unable to uncover evidence of harm caused specifically by the K-C wipes. There could be a different result if hard evidence were to emerge that particular wet wipes labelled as “flushable” were causing blockages in sewerage systems to a greater extent than ordinary toilet paper.

In addition, the decision does not explore the impact of K-C flushable wipes on domestic septic systems.

Moving forward
Sections 18 and 29 of the Australian Consumer Law (“ACL”) prohibit misleading representations about goods or services. Businesses can be liable to anyone who suffers damage because of the misrepresentations, but, in addition, a misleading representation can be an offence under section 151 of the ACL. Breaches can give rise to substantial monetary penalties (which can be in the millions of dollars depending on the circumstances). The ACCC can prosecute offences under the ACL and recover these penalties.

Whether any particular labelling or marketing claims can be considered to be misleading depends on the precise claims made and their context (including surrounding words and images). But for now, the term “flushable” should be available for use in Australia if:

(a) a suppler can prove that its “flushable” products pass at least the INDA/EDANA GD3 Guidelines;
(b) the marketing and labelling refer to these Guidelines (to explain what the supplier means by “flushable”);
(c) there are no actual problems with the flushability of the products; and
(d) the supplier does not make comparisons with toilet paper, such as that the products are similar to toilet paper or will disintegrate in a similar manner to toilet paper.

However, given that this is a controversial and well-litigated area, legal advice should be sought before making flushability claims.

Attempts are currently being made to establish an Australian Standard on flushability. If a Standard is established, this may alter what can be said on labelling and marketing materials.

This article provides general information only, and is not intended as legal advice specific to your circumstances. Please seek the advice of a legal professional if you have any particular questions.

Categories: Consumer law