Australian Competition and Consumer Commission v Dateline Imports Pty Ltd

Ordinary consumers and the meaning of the representations in the letter of 20 September 2010 193 Dateline admits that in its letter of 20 September 2010, it made all except two of the representations alleged by the ACCC. 194 The first exception is that Dateline again claims that it did not represent that persons using Keratin Complex could not be exposed to formaldehyde, but instead represented that they could not be exposed to levels that would provide a risk to safety. The letter stated, "Formaldehyde is not an ingredient in Keratin Complex" and "there is no formaldehyde emitted by Keratin Complex". The language used to express the absence of formaldehyde was absolute. In my opinion, ordinary persons reading the letter would not read into the representation the qualification asserted by Dateline. 195 The second exception is that Dateline denies the allegation that it represented that the Ireland ban would be overturned. Dateline contends it represented that it was its opinion that the ban would be overturned. In deciding whether the representation that the Ireland ban would be overturned was a statement of fact or of opinion, the approach taken by French CJ in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [32] is instructive: Was it a statement of opinion? That is to say was it a statement of "judgment or belief of something as probable, though not certain or established"? 196 The letter of 20 September 2010 said, "Every decision made anywhere in the world to the contrary and specifically in Ireland, will be over-turned." The basis for this statement is set out elsewhere in the letter, namely that the Irish authorities had used HPLC testing, that HPLC was not the correct testing methodology and that NMR testing showed that Keratin Complex did not contain formaldehyde. The context suggests that the Irish authorities would be persuaded to see the error of their decision by seeing the results of the interim NMR test and by evidence that the HPLC tests were not correct. 197 In order for the ban to be overturned, the Irish authorities would have to be persuaded that it was appropriate to do so. Any decision to overturn the ban would have to be based on the authorities' assessment of the relevant regulations and the scientific evidence. Such a decision was one that, patently, Dateline and others associated with Keratin Complex might be able to influence, but could not control. The statement in the letter amounted to a strident and emphatic way of saying that Dateline believed that the Ireland ban would be overturned. In my view, ordinary persons who read the letter would regard the statement that the Ireland ban would be overturned as an expression of opinion, not a statement of fact. 198 While Dateline admits that the letter of 20 September 2010 represented that "Keratin Complex did not contain formaldehyde", what was conveyed by that representation is in dispute. It is necessary to consider what meaning ordinary persons who received the letter would attribute to the word formaldehyde. 199 The persons who received the letter of 20 September 2010 were engaged in the hairdressing business or in the business of selling hairdressing products. They were more knowledgeable about hairdressing products and their ingredients than ordinary members of the public. The letter was written to those persons because Mr Taylor knew or believed they had received information that Keratin Complex contained formaldehyde, or contained formaldehyde in levels that breached regulatory limits. If they were not aware of that information before, they certainly were as a result of receiving the letter. A not insignificant number of ordinary persons receiving the letter were likely to have known, at least from the letter, that formaldehyde was a chemical sometimes used in hair straightening products. They would understand that formaldehyde is or can be in a liquid, because Keratin Complex was a liquid and the inference is that it could have contained formaldehyde but did not. They would be aware, from the letter if from no other source, that regulatory standards either banned or limited the quantity of formaldehyde in hair straightening products. They would therefore be aware that formaldehyde was a dangerous or potentially dangerous chemical. 200 I conclude that a not insignificant number of ordinary persons in the group who received the 20 September 2010 letter would understand formaldehyde to be a chemical called formaldehyde, which is or can be in a liquid. 201 I have already found that a simple aqueous solution of methylene glycol and unreacted formaldehyde is formaldehyde, but that the ACCC has not proved that this combination is still formaldehyde when in a more complex solution like Keratin Complex. 202 A not insignificant number of ordinary persons to whom the letter was sent would understand Keratin Complex to contain organic and chemical components and to have a limited life. Suppliers of hairdressing products and hairdressers would be familiar with the concept of such products having a limited "shelf life". They would understand the representations concerning the properties of the product to hold only for the shelf life of the product. Based on the evidence of Mr Anthony, the shelf life of Keratin Complex was two years.

Whether the representations in the letter of 20 September 2010 were false

Whether the representation that Keratin Complex did not contain formaldehyde was false 203 The letter of 20 September 2010 stated that formaldehyde "is not an ingredient and cannot be detected in Keratin Complex". Dateline accepts that it represented that Keratin Complex did not contain formaldehyde. 204 I have already found that the NMR test carried out on 2 February 2012 demonstrated the presence of methylene glycol. However, that evidence does not prove that methylene glycol was found in Keratin Complex within its two year shelf life. In addition, I have already found that methylene glycol and unreacted molecules of formaldehyde in a complex solution like Keratin Complex cannot be regarded as formaldehyde without adequate evidence that it is to be so regarded. 205 I therefore find that the ACCC has not proved that the representation in the letter that Keratin Complex did not contain formaldehyde was false or misleading or deceptive or likely to mislead or deceive. The making of that representation did not contravene s 53(a) or s 52(1).

Whether the representation that persons using Keratin Complex could not be exposed to formaldehyde was false 206 I have already found that the ACCC has not proved the allegation that the website representation that persons using Keratin Complex could not be exposed to formaldehyde was false. For the same reasons, I find that the ACCC has not proved that the same representation in the letter was false. 207 I therefore find that Dateline's representation in the letter that persons using Keratin Complex could not be exposed to formaldehyde did not contravene s 53(c) or s 52(1).

Whether the representation that Keratin Complex was safe for its recommended use was false 208 For reasons I have set out earlier, I find that the ACCC has not proved that the representation in the letter that Keratin Complex was safe for its recommended use was false or misleading or deceptive or likely to mislead or deceive. 209 I therefore find that the making of this representation did not contravene s 53(c) or s 52(1).

Whether the representation that Keratin Complex complies with all health and safety regulations in the world was false 210 Dateline's letter of 20 September 2010 said, "Keratin Complex has been confirmed as being totally safe and compliant with every health and safety regulation, worldwide." The ACCC alleges, and Dateline admits, that the letter represented that "Keratin Complex complies with all health and safety regulations in the world". 211 The ACCC alleges that Keratin Complex did not comply with all health and safety regulations in the world at the time the representation was made. It points to the fact that Keratin Complex was banned from sale in the Republic of Ireland as indicating that it did not comply with Irish health and safety regulations. 212 I do not accept that the ACCC has proved that Keratin Complex did not comply with the Irish regulations. The evidence establishes that the product was banned in Ireland, and it may be inferred that the Irish authorities considered that the product did not comply with the relevant regulations. However, that does not establish that Keratin Complex did not in fact comply with such regulations. It is not uncommon for public authorities to take action on the basis that legislation has been breached, only for the decision to later be shown to be wrong. Copomon and Keratronics vigorously disputed the action taken by the Irish authorities on the basis that HPLC testing was inadequate. The ACCC has not attempted to demonstrate what the Irish regulations were and in what way Keratin Complex did not comply with them. The fact that Keratin Complex was banned from sale in Ireland proves only that the authorities were of the opinion that the regulations were breached, not that they were in fact breached. 213 The ACCC argues next that the level of formaldehyde in Keratin Complex exceeded that permitted by Australian health and safety regulations. The ACCC attempted to make good this submission by reference to the Queensland regulatory framework. 214 Section 132 of the Health Act 1937 (Qld) permits regulations to be made about matters including prohibiting or restricting the sale of poisons. 215 Regulation 271(1)(a) of the Health (Drugs and Poisons) Regulation 1996 (Qld) ("the Health Regulation"), as in force at the time the letter of 20 September 2010 was distributed, relevantly provides that: A person must not …sell…a regulated poison unless the person…sells…the regulated poison under an approval. 216 There is no suggestion that any "approval" was in place for Keratin Complex. The expression "regulated poison" is defined in Appendix 9 of the Health Regulation as, "a poison in Appendix 7 of this regulation". Appendix 7 defines a number of specific items and included as the ninth item, "a poison included in Appendix C of the standard". The word "standard" is, in turn, defined in Appendix 9 to mean, "the Standard for the Uniform Scheduling of Drugs and Poisons" set out in Schedule 1 of the Poisons Standard 2009 (Cwlth)." 217 Schedule 1 of the Poisons Standard 2009 (Cth) is headed, "Standard for the Uniform Scheduling of Drugs and Poisons No. 23 published by the National Drugs and Poisons Scheduling Committee in 2009". Appendix C to the Poisons Standard includes this entry: FORMALDEHYDE (excluding its derivatives) (a) in oral hygiene preparations containing more than 0.1 per cent of free formaldehyde; (b) in aerosol sprays for cosmetic use containing 0.005 per cent or more of free formaldehyde; (c) in nail hardener cosmetic preparations containing 5 per cent or more of free formaldehyde; or (d) in all other cosmetic preparation 0.05 per cent or more of free formaldehyde except in preparations containing 0.2 per cent or less of free formaldehyde when labelled with the warning statement: CONTAINS FORMALDEHYDE. 218 The allowable formaldehyde content in Keratin Complex is governed by paragraph (d) of the relevant entry in Appendix C, as a cosmetic preparation that did not fall within paragraphs (a) - (c). 219 It may be seen that cosmetic preparations containing "free formaldehyde" could fall within the meaning of "regulated poison", but that cosmetic preparations which contained only a "derivative" of formaldehyde could not. 220 The effect of reg 271(1) was that the sale of a cosmetic product that paragraph (d) of the entry for formaldehyde in Appendix C applied to was: (a) prohibited, without an approval, if it contained more than 0.2% of free formaldehyde; (b) permitted if it contained between 0.05% and 0.2% of free formaldehyde and was appropriately labelled; (c) permitted if it contained less than 0.05% of free formaldehyde. 221 The NMR test carried out on behalf of the ACCC did not detect the presence of formaldehyde gas. It did detect methylene glycol, which means that some quantity of unreacted formaldehyde molecules must also have been present. 222 Two questions arise. The first is whether the combination of methylene glycol and unreacted formaldehyde is "free formaldehyde". The second is whether methylene glycol is a "derivative" of formaldehyde. 223 It is significant that the Poisons Standard uses "free formaldehyde", as well as "formaldehyde". That suggests that the expressions are not synonymous. 224 The expression "free formaldehyde" was not defined until a definition was inserted with effect from 1 September 2012 to specifically include methylene glycol. Both parties claimed the amendment supported their respective cases, but my opinion is that the amendment does not assist in construing the meaning of "free formaldehyde" prior to the amendment. 225 I consider that where "formaldehyde" is used by itself in the Poisons Standard, it bears its ordinary, or dictionary, meaning. It refers to methylene glycol and unreacted molecules of formaldehyde and to formaldehyde gas. 226 The ACCC's experts considered that free formaldehyde has the same meaning. Associate Professor McGeary stated that formaldehyde molecules can react irreversibly with some compounds, and says that this type of formaldehyde is sometimes referred to as "bound formaldehyde". In contrast, with methylene glycol the reaction is readily reversible. Dateline's experts considered that "free formaldehyde" refers only to gaseous formaldehyde and unreacted formaldehyde, but does not include methylene glycol. 227 Ultimately, the question is what the drafters intended "free formaldehyde" to mean in the Poisons Standard. That question must be determined by reference to the language and the context in which the expression appears. In determining the meaning of "free formaldehyde", the words "excluding its derivatives" are useful. Paragraphs (a) - (d) do not apply to derivatives of formaldehyde. 228 Professor Haddad gave oral evidence during a session of concurrent evidence given by the experts that methylene glycol is a derivative of formaldehyde. The ACCC submits that this was just a "passing reference" and should not be given any weight. However, Professor Haddad made this statement quite deliberately. It was made in the presence of the other experts, and none of the others demurred. Professor Haddad was not cross-examined on the point. That aspect of his evidence was uncontested. 229 The Macquarie Dictionary defines "derivative", in chemistry, as "a substance or compound made from, or structurally related to, another substance or compound". The Oxford English Dictionary defines "derivative", relevantly, as "[a] compound obtained from another e.g. by partial replacement". The evidence is that when formaldehyde and water are combined, methylene glycol is obtained. The dictionary definitions support Professor Haddad's view and probably explain why the other experts did not dissent. 230 Once it is seen that paragraphs (a) - (d) of the formaldehyde entry in Appendix C of the Poisons Standard do not apply to methylene glycol, it may be seen that "free formaldehyde" was unlikely to refer to methylene glycol prior to the amendment. The expression "free formaldehyde" referred only to formaldehyde gas and to dissolved but unreacted molecules of formaldehyde in a solution. The evidence is that formaldehyde is readily released from a solution of methylene glycol and unreacted formaldehyde, but, in my view, prior to the amendment formaldehyde became "free formaldehyde" only when it was released. 231 The NMR testing of Keratin Complex relied on by the ACCC only detected the presence of methylene glycol. Keratin Complex has not been shown to exceed the regulatory limit, at the relevant times, for "free formaldehyde". In addition, that limit could not apply to methylene glycol because it is a derivative of formaldehyde. 232 The ACCC has not proved a breach of the Queensland regulatory standards. It did not suggest that those standards are different elsewhere in Australia or elsewhere in the world. 233 Therefore, the ACCC has not proved that the representation that Keratin Complex complies with all health and safety regulations in the world was a representation that Keratin Complex had a benefit that it did not have. Neither has the ACCC proved that the representation was misleading or deceptive or likely to mislead or deceive. I therefore find that the ACCC has not proved that Dateline contravened s 52(1) or s 53(c) by making that representation.

Whether the representation that the Ireland ban would be overturned was made on reasonable grounds 234 The ACCC alleges that Dateline's letter of 20 September 2010 represented that the Ireland ban on Keratin Complex would be overturned. I have found that the representation was that it was Dateline's opinion that the Ireland ban would be overturned. It was a representation with respect to a future matter. 235 Section 51A of the TPA provided: (1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading. (2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. 236 It is implicit in s 51A(1) that where a corporation does have reasonable grounds for making a representation with respect to a future matter, then there will be no contravention of s 52(1): Quinlivan v ACCC (2004) 160 FCR 1 at [14]. 237 Section 51A(2) imposes an evidential burden on the respondent to adduce evidence on the issue of whether there were reasonable grounds for making the representation, but no persuasive onus falls upon the respondent to prove that it had reasonable grounds: North East Equity Pty Ltd v Proud Nominees Pty Ltd (2012) 285 ALR 217 at [28]. Once the respondent adduces evidence of reasonable grounds, the applicant must satisfy the dispositive burden of showing that the respondent did not have reasonable grounds for making a representation: North East Equity at [30]. 238 A breach of s 52(1) will not be proven if the evidence demonstrates that there are: (a) some facts or circumstances; (b) existing at the time of the representation; (c) on which the representor in fact relied; (d) which were objectively reasonable; (e) which support the representation made: Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513 per Heerey J. 239 In Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82, the Full Court said at 88: A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or by implication) that the maker of the statement had a particular state of mind when the statement was made and, commonly at least, that there was basis for that state of mind. If the meaning contained in or conveyed by the statement is false in that or in any other respect, the making of the statement will have contravened s 52(1) of the Act … [T]he incorrectness of an opinion (assuming that can be established) does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any, or any adequate, foundation. The applicants argued that, nevertheless, the statement of an incorrect opinion is misleading or deceptive or likely to mislead or deceive merely because it misinforms or is likely to misinform. An expression of opinion which is identifiable as such conveys no more than that the opinion expressed is held and perhaps there is basis for the opinion. At least if those conditions are met, an expression of opinion, however erroneous, misrepresents nothing. 240 The letter of 20 September 2010 expressly set out two matters upon which Dateline's representation that the Ireland ban would be overturned were based. The first matter was that HPLC testing could not determine whether Keratin Complex contained formaldehyde. The second was that Keratin Complex did not in fact contain formaldehyde. The opinion expressed implies that these matters were sufficient to result in the ban being overturned. 241 As to the first of these matters, by 20 September 2010, Mr Taylor had been told repeatedly by the distributor and manufacturer of Keratin Complex that HPLC testing could not detect whether Keratin Complex contained formaldehyde, or whether formaldehyde was created by the testing process. They relied upon plausible scientific evidence to make that assertion. In addition, Dr Ballantini of the University of Pisa had confirmed that derivatisation during the testing process could be the problem. Mr Taylor was also informed that the Irish authorities believed that HPLC testing was inadequate, and there was nothing to demonstrate the contrary. Under the circumstances, I consider that there was a reasonable basis for Mr Taylor to form the view and state that the HPLC testing used by the Irish authorities could not detect whether Keratin Complex contained formaldehyde. 242 The second matter to consider is whether there was a reasonable basis for Mr Taylor's statements that Keratin Complex did not in fact contain formaldehyde. He had been told repeatedly by the distributer and manufacturer that formaldehyde was not an ingredient in Keratin Complex. Mr Taylor understood from Mr Anthony's statement of 5 September 2010 that the reaction of formalin with cysteine produced timonacic acid and that under normal use, and if undiluted, the reaction was stable. If this was as far as the information went, I would consider that Mr Taylor had reasonable grounds for his opinion that Keratin Complex did not contain formaldehyde. 243 However, there was other information available to Mr Taylor by the time he wrote the letter. The interim NMR report prepared by Intertek on 15 September 2010 said: Free formaldehyde was not detected…although the spectra acquired are consistent with samples containing methylene glycol, the hydrated form of formaldehyde. Un-hydrated free formaldehyde is extremely reactive in aqueous solutions and predominantly exists as methylene glycol. 244 The interim NMR report indicated that methylene glycol was a form of formaldehyde. It indicated that what was absent was free formaldehyde, not that there was no formaldehyde in Keratin Complex. Mr Taylor stated that he understood the interim NMR report to indicate that there was effectively no formaldehyde in Keratin Complex. But that was not what it said. Dateline's letter misrepresented the effect of the report when it stated that formaldehyde was not detected in Keratin Complex. 245 Mr Taylor stated that his understanding was reinforced by the draft press release prepared by Copomon which said that scientists from three countries had that stated that "NO FREE FORMALDEHYDE WAS FOUND in Keratin Complex". However, that draft press release also ignored the presence of methylene glycol. 246 Mr Taylor stated that he understood that methylene glycol was a different molecule to formaldehyde. In his oral evidence, he said that he understood that formaldehyde was a gas only. However, if that was Mr Taylor's understanding, then it depended upon a selective reading of the interim NMR report. That report plainly indicated that methylene glycol was a form of formaldehyde. It is true that the question of whether methylene glycol is a form of formaldehyde is controversial and was the subject of considerable debate among the experts in this case. However, Mr Taylor was prepared to rely upon the expertise of the author of the interim NMR report to claim in the letter that Keratin Complex did not contain formaldehyde, but apparently not for her opinion that methylene glycol is a form of formaldehyde. Mr Taylor has no qualifications or expertise in chemistry and, in my opinion, on the material available to him at the time he wrote the letter, there were not reasonable grounds for him to conclude that Keratin Complex did not contain formaldehyde. I emphasise that I have taken the interim NMR report into account, not as to the truth of its contents, but for the purpose of assessing whether Dateline had reasonable grounds for making the representation. 247 The ban imposed by the Irish authorities on Keratin Complex was based on the product containing free formaldehyde in excess of the maximum allowable limit. Whether the ban would be overturned was likely to depend, not only upon demonstrating that the HPLC test was inappropriate, but also upon NMR testing showing that Keratin Complex did not contain free formaldehyde in excess of the limit, and upon the Irish authorities being persuaded that the NMR testing was accurate and that the presence of methylene glycol did not contravene the Irish regulations. In light of the interim NMR test, it was logical that the ban might not be overturned unless the Irish authorities could be persuaded that methylene glycol was not a form of formaldehyde and was not covered by the Irish regulations. There is no evidence that Mr Taylor sought any advice as to whether methylene glycol would be regarded as a form of formaldehyde for the purposes of the Irish regulations. 248 The representation made by Dateline was that it was its opinion that the Ireland ban would be overturned, not that it could be. Not even Copomon and Keratonics went that far. 249 When Mr Taylor asked Mr Anthony on 3 September 2010 about the likelihood of the formaldehyde problem being overcome and whether it would be possible to overturn the recall in Ireland, Mr Anthony said that the formaldehyde problem should be able to be overcome in the next month, but did not address the question of whether the recall could be overturned. Mr Gerstein had said that HPLC testing was mandated in Ireland, so when he said in his email of 3 September 2010 that he was unsure how long it would take to overturn the Irish ban it could not be read as any form of unequivocal statement that his opinion was that it would be overturned. 250 Mr Taylor's email of 2 September 2010 indicated that he was not confident that the Ireland ban would be overturned. Mr Taylor said: What chance is there of having the Irish…authorities reverse or qualify the recall? Have never heard of this happening before. Gov departments don't usually admit they are wrong and are always very thorough with their analysis and decision making to avoid any legalities. 251 An email from Dr Ballantini on 17 September 2010 said, "I think that this document could be used to sent [sic] to HSE in order to obtain the withdrawal of the RAPEX". Mr Taylor, in an email to Mr Anthony, interpreted Dr Ballantini's email as saying, "their decision could be overturned" 252 It is true that the Irish ban on Keratin Complex was stated to have been imposed because of its free formaldehyde content and the interim NMR test said that no free formaldehyde could be detected. However, the mere absence of free formaldehyde in the interim NMR test would not necessarily mean that the authorities would overturn the ban. 253 It was far from clear that the Irish authorities would overturn the ban based on the interim NMR report. Their scientists might query the precise methodology used and the reliability of the result. The authorities might wish to commission independent testing. The fact that the interim NMR report indicated that methylene glycol was present, even if free formaldehyde was not, might affect the consideration of the authorities as to whether to overturn the ban. 254 The final report remained to be provided. An email from Ms Rothwell, the Intertek analyst, asked whether further analysis was required "to quantify the free formaldehyde based on the levels of methylene glycol present". While it may not have been clear to Mr Taylor exactly what this meant, it ought to have raised in his mind the possibility that methylene glycol might be converted to free formaldehyde in Keratin Complex under some conditions. 255 Further, it is striking that the body of Dateline's letter of 20 September 2010 referred only to the absence formaldehyde, not free formaldehyde. It was the absence of formaldehyde that was represented to form the basis of Dateline's opinion that the ban would be overturned. Dateline may have had grounds for representing that the ban could be overturned because of the interim NMR report's finding that no free formaldehyde could be detected. However, the letter, even read in the context of the attached extract of the interim NMR report, based the opinion that the ban would be overturned upon the absence of any form of formaldehyde. 256 The confidence expressed by Dateline in stating that the Ireland ban would be overturned was not justified by the information that Mr Taylor received and was not reflected in his own correspondence to Copomon and Keratronics. The representation was not qualified. It did not indicate merely that the ban could be overturned or, even, that it was likely to be overturned. 257 Statements by Copomon that Keratin Complex did not contain formaldehyde, the tests at Miguel Hernández University and the report of Bruce Green were insufficient, by themselves, to provide reasonable grounds for making the representation in light of the detection of methylene glycol by the recent interim NMR test and opinion stated that methylene glycol was a form of formaldehyde. It was not reasonable for Dateline to rely on those opinions without, at least, ascertaining whether the presence of methylene glycol would affect those opinions. 258 I do not accept that Dateline had reasonable grounds for making the representation that the Ireland ban would be overturned. Therefore, pursuant to s 51A(1) of the TPA, the representation is taken to be misleading. I find that the making of this representation breached s 52(1).

Whether there were reasonable grounds for making the other representations 259 The ACCC alleges that Dateline represented in its letter of 20 September 2010 that it had reasonable grounds for making representations (which I will call "the primary representations") that: (a) Keratin Complex did not contain formaldehyde; (b) persons using the product could not be exposed to formaldehyde; (c) Keratin Complex was safe for its recommended use; (d) it complied with all health and safety regulations in the world; (e) Keratin Complex contained no harmful chemicals; (f) formaldehyde cannot be detected in Keratin Complex. 260 Dateline admits that it made the representations (subject to the question of the meanings of those at (a) and (b), which I have already dealt with). 261 The ACCC alleges that Dateline did not have reasonable grounds for making the primary representations and, therefore, the representations were misleading or deceptive or likely to mislead or deceive. Dateline asserts that it did have reasonable grounds. 262 The ACCC's pleading and the admission by Dateline are curious. The ACCC seems to assert, and Dateline seems to accept, that Dateline may have breached s 52(1) by making the primary representations without reasonable grounds even though the primary representations were ultimately proved to be true. In the absence of the admission, there might have been a real issue as to what an ordinary consumer would have understood the primary representation to mean. Further, if the parties are correct, it would mean that the kind of consequence imposed by s 51A(1) in relation to a representation about a future matter can be imported into representations about past or present matters. 263 In Quinlivan v ACCC (supra), the Full Court said at [14]: [I]n the case of a misleading representation where no future matter is involved it does not matter whether the corporation had reasonable grounds or not. 264 In support of that proposition, the Full Court cited Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513-514 which indicates that the making of a representation may be misleading or deceptive even if the maker had reasonable grounds for making it. The passage from Quinlivan v ACCC (supra) is expressed more widely. It may suggest that if a representation as to a past or present matter is true, the making of the representation will not be misleading or deceptive conduct even if the maker did not have reasonable grounds for making it. That position would be consistent with its clearly established corollary that if a representation as to a past or present matter is untrue, then it irrelevant that there were reasonable grounds for making the representation. 265 I have already found that the ACCC has not proved the falsity of the representations in the letter that Keratin Complex did not contain formaldehyde, that persons using Keratin Complex could not be exposed to formaldehyde, that Keratin Complex was safe for its recommended use and that Keratin Complex complied with all health and safety regulations in the world. 266 I find that the ACCC has not proved that the representation in the letter that Keratin Complex contained no harmful chemicals was false because Keratin Complex has not been demonstrated to have contained formaldehyde. Further, Dr Golden's evidence demonstrated that methylene glycol is not a harmful or dangerous chemical in the quantity found by the ACCC's NMR test to exist in Keratin Complex. 267 As to the representation that formaldehyde could not be detected in Keratin Complex, I consider that, in the context, the meaning that the people who received the letter would attribute to the representation is that the interim NMR test carried out by Intertek did not detect formaldehyde. Methylene glycol was apparently detected in Keratin Complex by the Intertek interim NMR test, but, by agreement of the parties, I cannot take the results of the test as evidence of the truth of those results. The ACCC has not proved that the interim NMR test detected formaldehyde and has not proved that the representation was untrue. 268 I consider that a reasonable ground for making a representation is that the representation is true. A representation may be made that, objectively, seems outlandish or fanciful; but, sometimes such a representation proves to be true. Dateline claims that its primary representations were true. There is an onus on the ACCC to prove that the representations were not true. That has not been proved. 269 The only case I was referred to on this issue was ACCC v Jones (No 5) [2011] FCA 49. In that case, Logan J considered allegations that were similar to those in the present case in that the ACCC alleged that the respondent made representations that were untrue and, further, that he had no reasonable grounds to make the representations. Logan J held both that the representations were untrue and that there were no reasonable grounds for making them. The circumstances of that case are, in my opinion, distinguishable from those in the present case because here I have found that the ACCC has not proved the falsity of the representations. 270 In case I am wrong in my view that a reasonable ground for making a representation is that it is true, I will proceed to otherwise consider the reasonableness of the ground for making the representations by reference to the information available to Mr Taylor when he wrote the letter. 271 On that basis, I would consider that the ACCC has demonstrated that Dateline did not have reasonable grounds to make the representation that Keratin Complex did not contain formaldehyde. The Intertek interim NMR test showed the absence of free formaldehyde, but the presence of methylene glycol which was described as the "hydrated form of formaldehyde". In these circumstances, there was no reasonable basis for the representation in the letter of 20 September 2010 that Keratin Complex does not contain formaldehyde. 272 For the same reason, I would find that Dateline did not have reasonable grounds for making the representation that persons using Keratin Complex could not be exposed to formaldehyde. In the face of the interim NMR report, there was no warrant for that emphatic representation. 273 I would not accept that Dateline had reasonable grounds for making its representation that Keratin Complex was safe for its recommended use. Earlier, the distributor and the manufacturer had assured Dateline that the product was safe for its recommended use. That view was based upon the proposition that timonacic acid would not break down. However, the interim NMR report revealed that methylene glycol was present, suggesting that timonacic acid had broken down. Mr Taylor did not seek advice from Copomon or Keratronics as to whether the presence of methylene glycol affected their view of the safety of the product. A reasonable person in Mr Taylor's position ought to have concluded that, at least, Keratin Complex might not be safe for its recommended use. There was no reasonable basis for his emphatic and unequivocal representation that Keratin Complex was safe for its recommended use. 274 I would consider that Dateline did not have reasonable grounds for making the representation that Keratin Complex complied with all health and safety regulations in the world. It was plain that the Irish authorities considered that Keratin Complex did not comply with the Irish regulations. It was not apparent whether methylene glycol was considered to be formaldehyde under the Irish regulations. There is no evidence that Mr Taylor was aware of precisely what the Irish regulations said. I would consider that Dateline did not have reasonable grounds for making this representation. 275 I would consider that Dateline did not have reasonable grounds for making the representation that Keratin Complex contained no harmful chemicals. The Intertek interim NMR report described methylene glycol as a form of formaldehyde. Mr Taylor believed methylene glycol and formaldehyde to be different chemical compounds when he wrote the letter, but he did not give evidence that he believed methylene glycol to be harmless. Later evidence was obtained from Dr Golden that suggested that methylene glycol is harmless, but Mr Taylor did not have that evidence at the time. In these circumstances, I would consider that there were not reasonable grounds for the representation that Keratin Complex contained no harmful chemicals. 276 However, for the reasons I have given earlier, I conclude that Dateline did not contravene s 52(1) by representing that it had reasonable grounds for making the primary representations.

Accessorial liability of David Taylor 277 The ACCC case against Mr Taylor relies on ss 75B and 76E of the TPA. It is that he was directly or indirectly, knowingly concerned in, or a party to the contraventions and aided, abetted, counselled or procured Dateline's contraventions of ss 52, 53(a) and (c) by reason of the representations made in the letter of 20 September 2010. 278 I have found that the only representation made in Dateline's letter of 20 September 2010 that contravened the TPA was its representation that it was its opinion that the Ireland ban would be overturned. This was a contravention of s 52(1). Section 76E has no application, as there was no contravention of s 53(a) or (c). 279 Section 75B of the TPA provided, relevantly: (1) A reference in this Part to a person involved in a contravention of a provision of Part…V…shall be read as a reference to a person who: (a) has aided, abetted, counselled or procured the contravention; … (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; 280 There is a lack of particularity in the ACCC's allegation of accessorial liability in relation to the contravention that I have found to be proved. The ACCC's case seems to be that Mr Taylor did all of aiding, abetting and counselling and procuring the contravention and that he was knowingly concerned in and a party to the contravention. Precisely how he is said to have done each of these things is not clear from the pleadings or the submissions. In particular, it is not apparent how Mr Taylor is said to have counselled or procured the contravention. 281 However, it is sufficient for present purposes to focus on the allegation that Mr Taylor was knowingly concerned in the contravention. That is because the relief sought against Mr Taylor in the originating application is a declaration to the effect that he was knowingly concerned in Dateline's contravention. 282 A person cannot be knowingly concerned in a contravention unless he or she has knowledge of the essential facts constituting the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. It is unnecessary for the ACCC to prove that Mr Taylor knew that his participation was in breach of the TPA. All that is required is actual knowledge of the essential elements of the contravention and intentional participation in it: Yorke v Lucas at 666-669. A combination of suspicious circumstances and failure to make an inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter: Pereira v Director of Public Prosecutions (1988) 82 ALR 217, cited in Compaq Computer Australia Pty Ltd v Howard Merry [1998] FCA 968 at p 4. 283 Where accessorial liability is in issue in relation to a representation in respect of a future matter, the ACCC must show that the respondent had actual knowledge that the representation was made and that either it was misleading or the respondent had no reasonable grounds for making it: Quinlivan v ACCC (supra) at [15]. 284 The material I have set out at [234]-[258] is relevant to the issue of accessorial liability. 285 Mr Taylor was the author of the letter of 20 September 2010. It was Mr Taylor who caused the letter to be sent to approximately 20 retailers or potential retailers. Accordingly, he knew that the representation was made. 286 I have found that the representation made by Dateline was that it was its opinion that the Ireland ban would be overturned. Mr Taylor's statement does not go so far as to indicate that he held the opinion that the Ireland ban would be overturned. The representation does not match Mr Taylor's belief, on the evidence of his own email of 17 September 2010, that the ban could be overturned. He believed, on the basis of the new tests developed by Dr Ballantini, that the ban could be overturned. Mr Taylor must obviously have known that the representation did not accord with his belief or opinion. I therefore find that Mr Taylor knew that the representation was misleading. 287 Further, I consider that Mr Taylor knew that Dateline did not have reasonable grounds for making the representation. I have already set out the reasons why there were no such reasonable grounds. The view that underlay the representation was that methylene glycol was not a form of formaldehyde, but this was quite inconsistent with the plain statement in the interim NMR report that methylene glycol was a form of formaldehyde. It was a report that Mr Taylor sought to rely on to demonstrate the absence of free formaldehyde; yet he ignored the description of methylene glycol as a "hydrated form of formaldehyde". In addition, none of the other sources of information that he was relying on, including Copomon, Keratronics and Dr Ballantini, made any statement that could justify a statement that the Ireland ban would be overturned, rather than merely that it could be overturned. The submission that Mr Taylor did not know that he had no reasonable grounds for making the representation in the letter of 20 September 2010 that the Ireland ban would be overturned is not consistent with the evidence. 288 I find that Mr Taylor was knowingly concerned in Dateline's contravention of s 52 of the TPA. Having reached this conclusion, it is unnecessary for me to deal with the ACCC's other allegations concerning s 75B of the TPA.

The magazine formaldehyde representations 289 The next set of representations were contained in advertisements for Keratin Complex that Dateline caused to be published in various magazines between 27 September 2010 and 10 October 2010. 290 On 27 September 2010, an advertisement for Keratin Complex appeared in a magazine called Grazia. The advertisement consisted of a large photograph of a model with straight hair, smaller "before" and "after" shots of the model, a picture of a bottle of Keratin Complex and text. 291 The text read, relevantly: A revolution in HAIR SMOOTHING AND CONDITIONING No matter how frizzy, curly or unruly your hair is Keratin Complex will straighten and condition your hair beyond your wildest dreams. Keratin Complex will make your hair straight, smooth, silky and resistant to humidity and frizz…and much easier to style. Keratin Complex treatments contain 40% natural Keratin for far superior and long lasting results. Keratin Complex is the No. 1 Keratin system in the world and is perfectly safe to use. Formaldehyde is not an ingredient in Keratin Complex. 292 The same advertisement was published in OK! magazine on 1 October 2010. On 3 October and 10 October 2010, the advertisement was published in a magazine called Sunday Magazine which is distributed with the Sunday Herald Sun newspaper in Victoria. 293 The ACCC alleges that the statement in each of the advertisements that "Formaldehyde is not an ingredient in Keratin Complex" represented that: (a) Keratin Complex did not contain formaldehyde; (b) persons using Keratin Complex could not be exposed to formaldehyde; (c) Keratin Complex was safe for its recommended use; and (d) Dateline had reasonable grounds for making the representations set out at (a) to (c). 294 My findings upon the formaldehyde magazine representations should be read in the context of my earlier discussion of and findings upon the website representations and the representations arising from the letter of 20 September 2010.

The magazine representation that Keratin Complex did not contain formaldehyde 295 Dateline, once again, submits that ordinary readers of the advertisements would not attribute any meaning to formaldehyde, or, alternatively, would regard it only as a gas. 296 It is necessary to identify the class or classes of readers of the magazines. 297 Grazia, judging from its covers, seems to consist principally of stories about celebrities, fashion and beauty. The language and content of its covers suggest that it is aimed principally at young women. 298 OK! appears to be almost exclusively about celebrities. It also seems to be directed principally towards young women. 299 Sunday Magazine has a range of articles about celebrities, cooking and stories relevant to motherhood and family life. It appears to be directed principally towards a slightly older female demographic, particularly women who have children. While Sunday magazine was targeted to an older group than the demographic of Grazia and OK!, I do not think that this would affect the meaning that ordinary readers of advertisements in the various magazines would attribute to the representations. 300 I consider that a broad cross-section of readers, principally women, is likely to have read the advertisements. Unlike the website advertisements, the vast bulk of the readers of the magazines are likely to have been people in the general population, rather than hairdressers or persons in the hairdressing industry or consumers looking specifically for hair treatment products. Despite this, I consider that ordinary consumers in the class reading the magazine advertisements would have a similar understanding of formaldehyde to those viewing the website. That is, there would be two groups, each containing a not insignificant number of ordinary potential consumers, with a slightly different understanding of what formaldehyde in its context in the magazine advertisements, meant. The first group would understand it to be a reference to a chemical called formaldehyde. That group would understand that Keratin Complex is a liquid since the advertisement has pictures of a bottle and would understand that formaldehyde is or can be in a liquid. The second group, a subgroup, would have a more specific understanding of formaldehyde as a chemical that can be used as a preservative, and which is or can be a liquid. Each group would understand that formaldehyde was not contained in Keratin Complex. 301 I have found that the ACCC has not proved that Keratin Complex contained formaldehyde. I find that the representation in each of the magazine advertisements that Keratin Complex did not contain formaldehyde has not been shown to be false or misleading or deceptive or likely to mislead or deceive. I rely on my reasoning in relation to the same representation appearing on Dateline's website. 302 I find that the ACCC has not proved that the making of this representation breached ss 53(a) or 52(1).

The magazine representation that persons using Keratin Complex could not be exposed to formaldehyde 303 Dateline again denies that it represented that persons using Keratin Complex could not be exposed to formaldehyde and argues that ordinary consumers would have understood the representation to mean that persons using Keratin Complex could not be exposed to formaldehyde at levels that posed a safety risk to humans. For the reasons I have set out earlier, I reject that argument. 304 I find that the ACCC has not proved that Keratin Complex contained formaldehyde. I find that the ACCC has not proved that the representation that persons using Keratin Complex could not be exposed to formaldehyde made in each of the magazine advertisements was false or misleading or deceptive or likely to mislead or deceive. I rely on my reasoning in relation to the same representation on Dateline's website. 305 I find that the ACCC has not proved that the making of the representation in the magazines breached ss 53(a) or 52(1).

Whether the magazine representation that Keratin Complex was safe for its recommended use was false 306 I have dealt earlier with the representation, in the context of the website representation, that Keratin Complex was safe for its recommended use. 307 For the same reasons, I find that the ACCC has not proved that Dateline represented in the magazine advertisements that Keratin Complex had a benefit that it did not have or that the representation was misleading or deceptive or likely to mislead or deceive. I find that the ACCC has not proved that the representation breached ss 53(c) or 52(1).

Whether Dateline had reasonable grounds for making the magazine representations 308 The ACCC again alleges that Dateline represented that it had reasonable grounds for making the magazine representations that Keratin Complex did not contain formaldehyde, that persons using Keratin Complex could not be exposed to formaldehyde and that Keratin Complex was safe for its recommended use. Again, subject to disputes about the meaning of the first two representations, Dateline admits that it represented that it did have reasonable grounds for making those representations. 309 For the same reasons that I gave in relation to the same allegation made about the letter of 20 September 2010, I find that this allegation cannot succeed in relation to the magazine advertisements. 310 I therefore find that the making of representations by Dateline that it had reasonable grounds for making its primary representations does not breach s 52(1).

Magazine advertisements between 30 August 2010 and 20 September 2010 311 Dateline caused an advertisement for Keratin Complex to be placed in Grazia magazine on about 30 August 2010, Sunday magazine on about 5 September 2010, OK! magazine on 10 September 2010 and Cleo magazine on about 20 September 2010. The advertisement has a large photograph of a model who has straight hair and the text read, relevantly: KERATIN COMPLEX EXPRESS Blow Out THE HOTTEST NEW KERATIN SERVICE SMOOTH SHINY HAIR IN A SNAP! KERATIN COMPLEX EXPRESS BLOW OUT Redefines and expands Keratin treatments As you know them This 45 minute in-salon service reduces frizz, curl, and styling time for up to 6 weeks AND washes out the same day. With its unique formulation Express Blow Out infuses over 35% Natural Keratin in the shortest amount of time! Get the hair you've always dreamed of with the Keratin Complex Express Blow Out! Available from salons everywhere. 312 The extract from the advertisement does not adequately reflect the colour and style of the various fonts used, which create an air of hyperbole. 313 The ACCC alleges that the words, "With its unique formulation [Keratin Complex] infuses over 35% Natural Keratin" represented that: (a) Keratin Complex was comprised of at least 35% natural keratin; and (b) whatever was infused into the hair by the use of Keratin Complex included natural keratin.

The meaning of the representations 314 I have already set out my view as to the class of consumers who would read Grazia, OK! and Sunday. Cleo appears to be aimed principally at young women. I do not see any reason to differentiate the readers of Cleo magazine from the readers of the other magazines. 315 It is convenient to begin with the second representation alleged by the ACCC, namely that whatever was infused into the hair by the use of Keratin Complex included natural keratin. The ACCC alleges that ordinary readers of the advertisement would understand natural keratin to mean keratin in its natural or unchanged state. It then argues that, having regard to the form of the keratin contained in Keratin Complex and the processing it undergoes, the representation was false. 316 On the other hand, Dateline argues that a consumer would not have any understanding at all of what keratin meant or, alternatively, that ordinary consumers in the class would consider that the representation meant that Keratin Complex contained keratin derived from natural sources. 317 I reject the first part of Dateline's argument. I consider that it is a word that is not uncommonly used and that many, if not most, consumers in the class would understand keratin to be a substance that occurs in hair and nails. Anyone who studied science or biology at any level at high school is likely to have that understanding. 318 The Macquarie Dictionary's first definition for "natural" is "existing in or formed by nature; not artificial". The Oxford English Dictionary relevantly defines "natural" as, "constituted by nature; having a basis in the normal constitution of things." I consider that ordinary consumers in the class would understand the representation to mean that keratin is a substance that is natural; in other words, that keratin is a substance that exists in or is formed or found in nature. 319 I reject the ACCC's submission that a not insignificant number of ordinary consumers would regard the advertisement as representing that Keratin Complex contained keratin in its natural or unchanged state. That would be contrary to common sense. Consumers would not expect, for example, shaving of nails or hair to be in the product. Rather, they would expect that a natural substance that contains keratin would be treated or processed to extract the keratin. In addition, I think that they would have an expectation that the keratin that was extracted might undergo some form of treatment or processing to make it usable in the product. 320 Therefore, I accept Dateline's submission that the statement that, "With its unique formulation [Keratin Complex] infuses over 35% Natural Keratin" meant, in part, that Keratin Complex contained keratin derived from natural sources. 321 The other aspect of the ACCC's allegation is that Dateline represented that Keratin Complex was comprised of at least 35% natural keratin. Dateline initially argued that ordinary consumers would understand the representation to mean that Keratin Complex contained an ingredient which contained natural Keratin and that at least 35% of that ingredient consisted of Keratin Complex. It was not clear whether Dateline maintained that submission by the end of the trial, but I will proceed on the basis that it does. 322 I consider that the natural meaning of the representation to ordinary consumers in the class is that when Keratin Complex is used, it is infused into the hair and that at least 35% of what is infused is natural keratin. Ordinary consumers in the class would infer that Keratin Complex consists of least 35% natural keratin. I consider that a not insignificant number of ordinary consumers would construe the representation in accordance with the meaning attributed to it by the ACCC; that is, Keratin Complex was comprised of at least 35% natural keratin. I do not think that ordinary consumers would give the representation the rather artificial construction that Dateline contends for.

Whether the representation that whatever was infused into the hair included natural keratin was false 323 Dateline submits that it was provided with materials from the supplier, Copomon, that demonstrated that Keratin Complex contained 40% natural keratin and that this formed the basis for its representation. It does not, of course, matter whether Dateline believed the representation to be true, or whether it had reasonable grounds for making the representation. 324 It is necessary to examine the evidence as to the composition of Keratin Complex in order to ascertain whether the representations have been shown to be false. 325 Mr Anthony of Keratronics, the manufacturer of Keratin Complex, gave evidence that keratin for use in cosmetic and hair products is supplied as "hydrolysed keratin". Hydrolysed keratin is used in a variety of products used to care for skin, nails and hair. Keratronics purchased its hydrolysed keratin from a company called Roxlor LLC ("Roxlor"). The general manager of Roxlor, Robert Veghte, gave evidence that Roxlor sells hydrolysed keratin under the name "Cynatine". 326 Mr Veghte's evidence was that sheep's wool is used to manufacture Cynatine, as it is comprised almost entirely of keratin. The wool is put through a water extraction which results in the production of keratin proteins in solution. The keratin proteins are enzymatically hydrolysed using a natural enzyme derived from a bacterium to break down the proteins and create peptides with a particle size of between 400 and 800 daltons. Mr Veghte's evidence was that there is no difference in the amount of amino acids at the end of the hydrolysis or in the ratio of amino acids from protein to peptide. The only difference is the reduction in the molecular size. After the product is hydrolysed, impurities are removed and the product can have water added to it to create a liquid finished product, or it can be freeze dried or spray dried to create a powder. Mr Veghte was not cross-examined, and I accept his evidence. 327 Mr Anthony's evidence was that in 2009 and 2010, Cynatine powder was used in the manufacture of Tri-Ionic Keratin. The Cynatine powder was added to water. A mild electrical current was applied to the solution to ensure that certain amino acids were dissolved. 328 I consider that the evidence of Mr Veghte and Mr Anthony is consistent with the representation that the keratin used in Keratin Complex was "natural keratin", in the sense that it comes from a source in nature. Further, the evidence does not demonstrate that the keratin that is ultimately found in Keratin Complex is so altered from keratin in its natural form that can be described as "artificial", rather than "natural" keratin. The fact that the Keratin is extracted and treated or processed to break it down to a usable form does not mean that it ceases to be natural keratin. 329 The ACCC submits that the representation that whatever was infused into the hair included natural keratin was false. I accept that Keratin Complex contained natural keratin. It is not in dispute that Keratin Complex was infused into the hair when used. I accept that part of what was infused into the hair was natural keratin. The ACCC has not proved that the representation that whatever was infused into the hair included natural keratin was false or misleading or deceptive or likely to mislead or deceive.

Whether the representation that Keratin Complex was comprised of at least 35% natural keratin was false 330 The next question concerns the falsity of the representation that Keratin Complex was comprised of at least 35% natural keratin. It will be recalled that Keratronics would use Cynatine to manufacture Tri-Ionic Keratin. There is no evidence that Cynatine or another form of keratin was added at any other stage during the process of manufacturing Keratin Complex. The Tri-Ionic Keratin was combined with a number of other ingredients, called Phase A. Phase A was then blended with another mixture of ingredients called Phase B to produce Keratin Complex. 331 Mr Anthony's evidence was that Keratronics usually manufactures Tri-Ionic Keratin in 400 gallon or 800 gallon batches. When making an 800 gallon batch, about 200 kg of Cynatine powder was used and half that amount was used when making a 400 gallon batch. There are about 3.79 litres to a gallon, so 800 gallons is about 3,030 litres. The first step in making Tri-Ionic Keratin was to add Cynatine powder to water. One litre of water weighs 1 kg, so Tri-Ionic Keratin contained approximately 6.6% keratin. This is broadly consistent with the evidence given by Mr Anthony that in the first step in making Tri-Ionic Keratin is to add one part (by weight) of Cynatine powder to, at the most, 12 parts (by weight) of water. It is also consistent with the MSDS for Tri-Ionic Keratin produced by Keratronics which showed that it consisted of 6.61% natural keratin. 332 The MSDS published by Keratronics for Keratin Complex indicated that it contained 40% Trionic-Keratin Protein. I consider that Tri-Ionic Keratin cannot itself be described as natural keratin. Rather, one of the ingredients of Tri-Ionic Keratin was natural keratin. Keratin Complex contained a little less than 7% natural keratin. 333 I therefore find that the representation in the magazine advertisements that Keratin Complex was comprised of at least 35% natural keratin was false and misleading or deceptive or likely to mislead or deceive. I find that the making of that representation breached s 53(a) and s 52(1) of the TPA. 334 I also find that the representation represented that Keratin Complex had a benefit that it did not have. The benefit represented was that at least 35% natural keratin would be infused into the hair. In fact only about 7% natural keratin was available to be infused. I find that the making of that representation breached s 53(c) of the TPA.

Magazine advertisements between 27 September 2010 and 5 November 2010 335 Dateline caused advertisements stating that "Keratin Complex treatments contain 40% natural Keratin" to be published in Grazia magazine on about 27 September 2010, OK! magazine on about 1 October 2010, Sunday Magazine on about 3 October and 10 October 2010 and Who magazine on about 5 November 2010. I have already set out the text of this advertisement in the context of ruling upon the representation contained in the same advertisement that "Formaldehyde is not an ingredient in Keratin Complex" (see [291]). 336 I have not previously discussed Who magazine. It is a magazine that appears to be similar to Grazia and OK! in that its stories are principally about celebrities and it appears to be directed towards young women. I do not consider that the class of consumers who would read Who magazine can be distinguished from those consumers who read OK! or Grazia and I consider that ordinary consumers who read Who magazine would have the same understanding of the representation as those who read OK!, Grazia and Sunday Magazine. 337 The ACCC submits that the words "Keratin Complex treatments contain 40% natural keratin" represented that Keratin Complex was comprised of 40% natural keratin. 338 I accept the ACCC's submission for the reason that I have given earlier, namely that Keratin Complex was comprised of only about 7% keratin. Therefore, I find that the representation that Keratin Complex was comprised of 40% natural keratin was false and misleading or deceptive or likely to mislead or deceive. The advertisement also represented that Keratin Complex had a benefit that it did not have. I find that the making of that representation breached s 53(a) and (c) and s 52(1) of the TPA.

Magazine advertisements between 4 October 2010 and 9 November 2010 339 Dateline caused an advertisement for Keratin Complex to be placed in Madison magazine on about 4 October 2010, Grazia magazine on about 11 October 2010, OK! magazine on about 22 October 2010, Vogue magazine on about 3 November 2010 and InStyle Professional magazine on about 9 November 2010. The advertisement contained a photograph of a model with straight hair and the text read: KERATIN COMPLEX EXPRESS BLOW OUT THE HOTTEST NEW KERATIN SERVICE 45 MINUTE SALON SERVICE LAST UP TO 6 WEEKS CREATES SMOOTH, SILKY, MANAGEABLE HAIR VOLUME, CURLS, STRAIGHT…ALL WITHOUT FRIZZ This 45 minute in-salon service reduces frizz, curl and styling time for up to 6 weeks by infusing 40% natural keratin into your hair in the shortest amount of time! Ideal for all hair types. Get the hair you have always dreamed of with the Keratin Complex Express Blow Out. 340 Again, this extract does not adequately reflect the colour and style of the various fonts used and air of hyperbole that is created. 341 Madison magazine appears to be about celebrities and fashion. Vogue magazine is also about celebrities and fashion, with a greater emphasis on fashion. Both seem to be aimed at a young female readership. I see no reason to distinguish the class of consumers who would read these magazines from those who would read OK! or Grazia. I also see no reason to distinguish between them in terms of their understanding of the advertisement. 342 InStyle Professional magazine describes itself as "The Magazine for the Hairdressing Professional". Despite its different readership, I do not think that the understanding of the representation contained in the advertisement by ordinary hairdressing professionals of the representation would differ from the understanding of ordinary readers of the other magazines. 343 The ACCC alleges that the words "by infusing 40% natural keratin into your hair" represented that: (a) Keratin Complex was comprised of at least 40% natural keratin; and (b) whatever was infused into the hair by the use of Keratin Complex included natural keratin. 344 For the reasons I have given earlier, I accept the first of the ACCC's submissions, but reject the second. 345 I find that the representation in the advertisement that Keratin Complex was comprised of at least 40% natural keratin was false and misleading or deceptive or likely to mislead or deceive and that it represented that Keratin Complex had a benefit that it did not have. I find that the making of that representation breached s 53(a) and (c) and s 52(1) of the TPA.

conclusion 346 In summary, I have found that by making the following representations, Dateline breached the following provisions of the TPA: (a) the representation in its letter of 20 September 2010 that it was its opinion that the Ireland ban on Keratin Complex would be overturned: s 52(1); (b) the representation published in magazines between 30 August 2010 and 2 September 2010 that Keratin Complex was comprised of at least 35% natural keratin: ss 52(1), 53(a) and (c); (c) the representation published in magazines between 27 September 2010 and 5 November 2010 that Keratin Complex was comprised of 40% natural keratin: ss 52(1), 53(a) and (c); (d) the representation published in magazines between 4 October 2010 and 9 November 2010 that Keratin Complex was comprised of at least 40% natural keratin: ss 52(1), 53(a) and (c). 347 I have found that the ACCC has not otherwise proved that Dateline breached ss 52(1) or 53(a) or (c) of the TPA. 348 I have found that Mr Taylor was knowingly concerned in Dateline's breach of s 52(1) involving the making of the representation that it was Dateline's opinion that the Ireland ban would be overturned. 349 I will hear the parties as to relief and costs. I certify that the preceding three hundred and forty-nine (349) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.