Australian Competition and Consumer Commission v Meg's Flowers Pty Ltd

Federal Court of Australia|2024-12-12|Before: Collier ACJ

In the period from 1 January 2019 to 10 February 2022, Meg's Flowers Pty Ltd (ACN 162 021 696) (Meg's Flowers), in trade or commerce: (a) engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law (ACL); (b) in connection with the supply or possible supply of goods, or in connection with the promotion by any means of the supply of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL; and (c) engaged in conduct that was liable to mislead the public as to the nature or characteristics of its goods in contravention of s 33 of the ACL, by making representations on websites operated by Meg's Flowers that flowers ordered from Meg's Flowers originated from a florist located in the town, suburb or locality referred to in the website (website local origin representation), when this was not the case.
In the period from 1 January 2019 to 10 February 2022, Meg's Flowers, in trade or commerce: (a) engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; (b) in connection with the supply or possible supply of goods, or in connection with the promotion by any means of the supply of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL; and (c) engaged in conduct that was liable to mislead the public as to the nature or characteristics of its goods in contravention of s 33 of the ACL, by causing Google to publish advertisements which implied that flowers ordered from Meg's Flowers originated from a florist located in the town, suburb or locality referred to in the advertisement (ad local origin representation), when this was not the case.

Pursuant to s 246(2)(b) of the ACL, Meg's Flowers, at its own expense: (a) within 90 days of the date of the Court's order, establish and implement an Australian Consumer Law Compliance Program (Compliance Program) designed to minimise the risk of future contraventions by Meg's Flowers of Part 2-1 and Part 3-1 of the ACL, and in particular ss 18, 29 and 33 of the ACL, with each of the following requirements: (i) appoint a director or a senior manager with suitable qualifications or experience in corporate compliance to be responsible for ensuring the Compliance Program is effectively designed, implemented and maintained (Compliance Officer). (ii) ensure that the Compliance Officer and each employee of Meg's Flowers or other person involved in Meg's Flowers' business who deals or who may deal with consumers attend training annually, which is to be developed by a suitably qualified compliance professional or legal practitioner with expertise in ACL. (iii) develop and implement procedures for identifying, classifying, storing and responding to competition and consumer law complaints. (iv) conduct annual reviews of the Compliance Program and record the findings in a compliance report. (b) maintain the Compliance Program for a period of three years from the date of the Court's order.
Within 28 days of the date of this order, Meg's Flowers publish a corrective notice at its own expense pursuant to s 246(2)(d) of the ACL that complies with the content, requirements and form set out in Attachment A to these orders, on the homepage of each website operated by Meg's Flowers, with the corrective notice to appear in an automatically generated active pop-up window or message box, or as a message located immediately below the website navigation bar for a period of not less than 30 days from the date of its publication.
A copy of the reasons for judgment, with the seal of the Court thereon, be retained in the Court for the purposes of s 137H of the Competition and Consumer Act 2010 (Cth).
Meg's Flowers pay a contribution to the costs of the Australian Competition and Consumer Commission in the amount of $50,000.00, to be paid within 30 days of these orders. ATTACHMENT A - CORRECTIVE NOTICE
The notice shall be in the following form: 1.1. The corrective notice will be required to be legible and the type will be at least 12 point, Times New Roman font and right and left justified; 1.2. The corrective notice will have a bold type prominent heading at least 18 point; 1.3. The corrective notice should not be less than 50% of the size of the computer or device screen (where the corrective notice is an automatically generated active pop-up window or message box); 1.4. The corrective notice will appear in an automatically generated active pop-up window or message box, whereby a member of the public is required to interact with the window or message box to close it (where applicable); and 1.5. The corrective notice should appear immediately upon access by a consumer on the homepage of each website operated by Meg's Flowers.
The notice shall be in the following terms: Federal Court finds that Meg's Flowers has breached the Australian Consumer Law The Federal Court of Australia (Court) has ordered that Meg's Flowers Pty Ltd (Meg's Flowers) pay $1 million in penalties for making false or misleading representations in the marketing of its flowers. Meg's Flowers admitted that, between 1 January 2019 and 10 February 2022, it contravened the Australian Consumer Law by making false or misleading representations that flowers ordered from Meg's Flowers were from a florist located in the town, suburb or locality referred to in a Meg's Flowers website or Google advertisement. In fact, Meg's Flowers is a national online business which distributes flowers through its corporate warehouses and, in some instances, subcontractors and does not operate physical local florist stores. Meg's Flowers made the false or misleading representations on 156 location-based websites and in 7,462 Google Ads, which related to suburbs, towns and localities across Australia. By engaging in this conduct, the Court declared that Meg's Flowers contravened sections 18, 29(1)(k) and 33 of the Australian Consumer Law. As part of its orders, the Court ordered that Meg's Flowers pay pecuniary penalties of $1 million, publish this corrective notice, and implement an Australian Consumer Law compliance program. For further information visit https://www.accc.gov.au/media or call the ACCC Infocentre on 1300 302 502. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLLIER ACJ: 1 Before the Court is a Statement of Agreed Facts and Joint Submissions on matters of liability and relief, both filed on 25 June 2024, by the applicant, the Australian Competition and Consumer Commission, and the respondent, Meg's Flowers Pty Ltd. The Joint Submissions annex the declarations and orders sought by both parties (Proposed Orders). 2 The Proposed Orders include orders which jointly seek the imposition of pecuniary penalties totalling $1,000,000.00 for admitted contraventions by the respondent of ss 29(1)(k) and 33 of the Australian Consumer Law (ACL). Importantly, the Joint Submissions recognise that the grant of relief remains at the discretion of the Court.

background 3 The Joint Submissions summarise the relevant factual background as follows: the respondent was an online floristry business; between 1 January 2019 and 10 February 2022 (Relevant Period), the respondent used its websites and Google advertisements to represent that it was a local florist in specific towns, suburbs or localities in Australia; the respondent instead fulfilled its orders from any one of its 11 premises, or in some instances, by sub-contractors; and this conduct had the potential to lead consumers into error regarding the location of the respondent. 4 The respondent has admitted that during the Relevant Period, on each of its seven "named" websites and 149 "other" websites, it represented to be a local florist in each location referable to the particular website name, that such representations were made in trade and commerce, and that the respondent thereby: engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; made false or misleading representations in connection with the supply of delivered flowers concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL; and engaged in conduct that was liable to mislead the public as to the nature or characteristics of its goods, in contravention of s 33 of the ACL. (website local origin representations) 5 The respondent has further admitted that during the Relevant Period, in each of its 7,462 Google advertisements, it represented to be a local florist, and that such representations were made in trade and commerce, and that the respondent thereby: engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; made false or misleading representations in connection with the supply of delivered flowers concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL; and engaged in conduct that was liable to mislead the public as to the nature or characteristics of its goods, in contravention of s 33 of the ACL. (ad local origin representations)

Contraventions 6 The respondent has admitted that its website local origin representations and ad local origin representations have contravened ss 18, 29(1)(k) and 33 of the ACL. 7 Section 18 reads: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1). 8 Section 29(1)(k) reads: 29 False or misleading representations about goods or services (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: … (k) make a false or misleading representation concerning the place of origin of goods; or … 9 Section 33 reads: 33 Misleading conduct as to the nature etc. of goods A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. 10 Sections 29 and 33 are civil penalty provisions pursuant to s 224(1)(a)(ii) of the ACL. There is no provision under the ACL for the Court to impose a penalty for a contravention of s 18. 11 The parties agree that, at material times, the maximum penalty per contravention of these provisions for the Relevant Period was the greater of: (a) $10 million; (b) three times the benefit of the contravention, if the court can determine the value of the benefit from the contravention; or (c) 10% of the annual turnover of the corporation, if the court cannot determine the value of the benefit of the contravention. 12 In the present case the parties agreed that the "greater" amount is $10 million, making it the maximum penalty for each contravention in the Relevant Period.

proposed orders 13 The Proposed Orders to which the parties agreed in their Joint Submissions are in the following terms: THE COURT DECLARES THAT: 1. In the period from 1 January 2019 to 10 February 2022, Meg's Flowers, in trade or commerce: 1.1. engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; 1.2. in connection with the supply or possible supply of goods, or in connection with the promotion by any means of the supply of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL; and 1.3. engaged in conduct that was liable to mislead the public as to the nature or characteristics of its goods in contravention of s 33 of the ACL, by making representations on websites operated by Meg's Flowers that flowers ordered from Meg's Flowers originated from a florist located in the town, suburb or locality referred to in the website (the website local origin representation), when this was not the case. 2. In the period from 1 January 2019 to 10 February 2022, Meg's Flowers, in trade or commerce: 2.1. engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; 2.2. in connection with the supply or possible supply of goods, or in connection with the promotion by any means of the supply of goods, made false or misleading representations concerning the place of origin of goods, in contravention of s 29(1)(k) of the ACL; and 2.3. engaged in conduct that was liable to mislead the public as to the nature or characteristics of its goods in contravention of s 33 of the ACL, by causing Google to publish advertisements which implied that flowers ordered from Meg's Flowers originated from a florist located in the town, suburb or locality referred to in the advertisement (the ad local origin representation), when this was not the case. THE COURT ORDERS THAT: 3. Within 30 days of the date of this order, Meg's Flowers pay to the Commonwealth of Australia pecuniary penalties under s 224(1)(a)(ii) of the ACL in the total sum of $1,000,000 in respect of the contraventions of ss 29(1)(k) and 33 identified in paragraphs 1 and 2 above. BY CONSENT, THE COURT ORDERS THAT: 4. Pursuant to s 246(2)(b) of the ACL, Meg's Flowers, at its own expense: 4.1. within 90 days of the date of the Court's order, establish and implement an Australian Consumer Law Compliance Program (Compliance Program) designed to minimise the risk of future contraventions by Meg's Flowers of Part 2-1 and Part 3-1 of the ACL, and in particular ss 18, 29 and 33 of the ACL, with each of the following requirements: 4.1.1. appoint a director or a senior manager with suitable qualifications or experience in corporate compliance to be responsible for ensuring the Compliance Program is effectively designed, implemented and maintained (Compliance Officer). 4.1.2. ensure that the Compliance Officer and each employee of Meg's Flowers or other person involved in Meg's Flowers' business who deals or who may deal with consumers attend training annually, which is to be developed by a suitably qualified compliance professional or legal practitioner with expertise in ACL. 4.1.3. develop and implement procedures for identifying, classifying, storing and responding to competition and consumer law complaints. 4.1.4. conduct annual reviews of the Compliance Program and record the findings in a compliance report. 4.2. maintain the Compliance Program for a period of three years from the date of the Court's order. 5. Within 28 days of the date of this order, Meg's Flowers publish a corrective notice at its own expense pursuant to s 246(2)(d) of the ACL that complies with the content, requirements and form set out in Attachment A to these orders, on the homepage of each website operated by Meg's Flowers, with the corrective notice to appear in an automatically generated active pop-up window or message box, or as a message located immediately below the website navigation bar for a period of not less than 30 days from the date of its publication. 6. A copy of the reasons for judgment, with the seal of the Court thereon, be retained in the Court for the purposes of s 137H of the CCA. 7. Meg's Flowers pay a contribution to the ACCC's costs in the amount of $50,000, to be paid within 30 days of these orders. 14 For the reasons set out below, I am satisfied that it is appropriate to make declarations and orders in these terms.

Consideration 15 In circumstances where liability in respect of breaches of civil penalty provisions has been established, the discretion of the Court to approve an agreed settlement of civil proceedings was explained by French CJ, Kiefel, Bell, Nettle and Gordon JJ in Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at 507-8 [58]-[59]: There is, however, no reason in principle or practice why civil penalty proceedings should be treated as an exception. Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills, highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty. To do so is no different in principle or practice from approving an infant's compromise, a custody or property compromise, a group proceeding settlement or a scheme of arrangement. It is true that there is a public interest in the imposition of civil penalties as opposed to the purely private interests which are in issue in many civil proceedings. But civil penalty proceedings are by no means the only civil proceedings in which the public interest is involved. Custody disputes involve the public interest. So do group proceedings and schemes of arrangement. So also do taxation, customs and social security appeals, and detention orders; and examples can be multiplied. Yet in each of those cases, it is wholly unexceptionable for a court to accept an agreed submission as to the nature and quantum of relief, provided the court is persuaded that it is an appropriate remedy. Once it is understood that civil penalties are not retributive, but like most other civil remedies essentially deterrent or compensatory and therefore protective, there is nothing odd or exceptionable about a court approving an agreed settlement of a civil proceeding which involves the public interest; provided of course that the court is persuaded that the settlement is appropriate. (emphasis added) 16 In the recent decision of Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2024] FCA 1126, O'Callaghan J helpfully outlined the applicable legal principles for determining whether proposed penalties in an agreed settlement were appropriate: Principles governing the imposition of pecuniary penalties The central purpose - ensuring deterrence [46] The applicable legal principles are nowadays well settled. See, by way of example only, Australian Competition and Consumer Commission v Dell Australia Pty Ltd (No 2) [2023] FCA 983 at [4]-[18]; and Australian Competition and Consumer Commission v Mazda Australia Pty Ltd (No 3) [2024] FCA 83 at [35]-[46]. [47] Deterrence, both specific and general, is the primary, if not sole, objective for imposing pecuniary penalties of the type sought here. The penalty must be fixed at a level that ensures that neither the contravener, nor would-be contraveners, would regard it as an acceptable cost of doing business. That said, a penalty is appropriate if it is no more than is reasonably necessary to deter further contraventions by the respondent and others. [48] In determining the appropriate penalty, the court must have regard to all relevant matters, including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; the circumstances in which the act or omission took place; and whether the contravener has previously been found by a court in proceedings to have engaged in any similar conduct. [49] The loss or damage to be considered by the court is not limited to financial harm. It could be non-pecuniary, such as a lost opportunity to make a different purchasing choice with accurate information. [50] The court must assess the nature and extent of the harm even if quantifying the harm is difficult and requires broad or rough estimation. [51] The prescribed maximum penalty is one yardstick that ordinarily must be applied and must be treated as one of a number of relevant factors. What is required is a reasonable relationship between the theoretical maximum and the final penalty imposed. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of specific and general deterrence of future contraventions of a like kind by the contravener and by others. This may be established by reference to the circumstances of the contravener and the contravening conduct. [52] Two principles or tools of analysis that can assist the court in determining an appropriate penalty for multiple contraventions are the course of conduct principle and the totality principle. These concepts may assist in the assessment of what may be considered reasonably necessary to deter further contraventions. [53] The course of conduct principle is commonly referred to as recognising that where there is an interrelationship of legal and factual elements of multiple contraventions, the court may penalise the acts or omissions as a single course of conduct. [54] The totality principle is that the total penalty for related contraventions should not exceed what is proper for the entire contravening conduct involved. This can be used by the court as a tool of analysis to ensure that the penalty is no more than reasonably necessary for deterrence. The exercise of the totality adjustment is directed to the overall impact of the accumulated effect of otherwise acceptable penalties to ensure that the whole is not greater than the sum of the parts. It is typically used as a "final check". [55] Other commonly relevant factors to consider in determining a penalty in cases such as this were described by Edelman J in Australian Competition and Consumer Commission v Woolworths Ltd [2016] FCA 44; [2016] ATPR 42-521 at [123]-[126], as follows: (a) the deliberateness of the contravention and the period over which it extended; (b) whether the contravention arose out of the conduct of senior management of the contravener or at some lower level; (c) whether the contravener has a corporate culture conducive to compliance as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; (d) whether the contravener has shown a disposition to cooperate with the authorities responsible for enforcement in relation to the contravention; (e) the financial position of the contravener; (f) whether the contravening conduct was systematic, deliberate or covert; (g) the extent of contrition; (h) whether the contravening company made a profit from the contraventions; (i) the extent of the profit made by the contravening company; and (j) whether the contravening company engaged in the conduct with an intention to profit from it. [56] But as the cases repeatedly say, that is not a shopping list of factors that must be taken into account. On the other hand, nor is it an exhaustive list. [57] The size of a contravener is relevant because, all other things being equal, a greater financial incentive will be necessary to persuade a well-resourced contravener to abide by the law than a poorly resourced contravener. [58] The extent to which the contravener has conceded liability and cooperated with the investigating authority is relevant to determining penalties and typically results in a discount off the penalty that otherwise would have been imposed. This reflects the fact that such discounts increase the likelihood of cooperation in the future by contraveners and free up the ACCC's resources. 17 These factors were addressed by the parties in their Joint Submissions, and are relevant for me to take into account in this case.

Nature, extent and duration of conduct 18 The parties submitted, the respondent offered the respondent conveyed the respondent may have the representations 19 The breadth of conduct No. "Named" websites Ashgrove Qld Caboolture Qld Ellenbrook WA Lane Cove NSW Mawson Lakes SA Sunbury Vic Tewantin Qld "Other" websites Albany Creek Qld Albion Park NSW Auchenflower Qld Baldivis WA Balwyn North Vic Bankstown NSW Banora Point NSW Baulkham Hills NSW Beenleigh Qld Bella Vista NSW Benowa Qld East Bentleigh Vic Berwick Vic Blackburn Vic Boronia Vic Box Hill Vic Bracken Ridge Qld Bridgeman Downs Qld Brighton Vic Broadbeach Qld Brunswick Vic Bulimba Qld Bundoora Vic Burpengary Qld Caloundra Qld Camberwell Vic Camperdown NSW Canning Vale WA Caringbah NSW Carnegie Vic Carrum Downs Vic Castle Hill NSW Chadstone Vic Cheltenham Vic Chermside Qld Claremont WA Clayton Vic Cobram Vic Coburg Vic Coorparoo Qld Crows Nest NSW Croydon Vic Currimundi Qld Dandenong Vic Darlinghurst NSW Deakin ACT Dee Why NSW Docklands Vic Drummoyne NSW East Maitland NSW East Melbourne Vic Eltham Vic Engadine NSW Essendon Vic Everton Park Qld Fawkner Vic Ferntree Gully Vic Fitzroy Vic Fortitude Valley Qld Glen Iris Vic Glen Waverley Vic Greensborough Vic Greenslopes Qld Greystanes NSW Grovedale Vic Halls Head WA Hawthorn Vic Heidelberg Vic Helensvale Qld Herston Qld Hoppers Crossing Vic Hurstville NSW Kellyville NSW Kew Vic Kingswood NSW Kirwan Qld Kogarah NSW Langwarrin Vic Lilydale Vic Lindfield NSW Little Mountain Qld Malvern Vic Maroochydore Qld Maroubra NSW Marrickville NSW Mascot NSW Mill Park Vic Milton Qld Mona Vale NSW Mooloolaba Qld Moonee Ponds Vic Morayfield Qld Mornington Vic Morwell Vic Mount Waverley Vic Nambour Qld Narangba Qld Narre Warren Vic Narre Warren South Vic Nerang Qld Neutral Bay NSW New Lambton NSW New Lambton Heights NSW Noosaville Qld North Adelaide SA Northcote Vic North Lakes Qld North Ryde NSW Nundah Qld Ormeau Qld Paddington NSW Parkville Vic Pimlico Qld Point Cook Vic Prahran Vic Preston Vic Pyrmont NSW Quakers Hill NSW Redcliffe Qld Robina Qld Seaford Vic Seven Hills NSW South Brisbane Qld South Melbourne Vic Southport Qld South Yarra Vic Springwood Qld St Ives NSW St Kilda Vic St Leonards NSW Surfers Paradise Qld Surry Hills NSW Taree NSW Tarneit Vic Terrigal NSW The Gap Qld Tiwi NT Toorak Vic Tugun Qld Wahroonga NSW Wantirna Vic Wantirna South Vic Warnbro WA Werribee Vic West Mackay Qld Westmead NSW West Perth WA Wheelers Hill Vic Williamstown Vic and I agree, that the penalties should reflect that the respondent's conduct was widespread and likely to mislead consumers. In particular, the parties have agreed that: delivered flowers for sale on multiple websites and in thousands of advertisements over a period of over three years; to consumers that it was a business local to relevant suburbs, towns or localities and that, by acquiring goods from the respondent, a consumer would be supporting a local business; distorted consumer choice by causing some consumers to acquire goods from the respondent when they would have otherwise purchased goods from its competitors; and were a prominent feature of the respondent's websites and Google advertisements. of the respondent across Australia can be seen from the websites on which they advertised (comprising the "named" and "other websites), being: Town, suburb or locality State/territory Relevant period Website 1 January 2019 to 10 February 2022 megsflowersashgrove.com.au 1 January 2019 to 10 February 2022 megsflowerscaboolture.com.au 1 January 2019 to 10 February 2022 megsflowersellenbrook.com.au 1 January 2019 to 10 February 2022 megsflowerslanecove.com.au 1 January 2019 to 10 February 2022 megsflowersmawsonlakes.com.au 23 June 2020 to 10 February 2022 megsflowerssunbury.com.au 2 May 2019 to 10 February 2022 megsflowerstewantin.com.au 1 January 2019 to 10 February 2022 megsflowersalbanycreek.com.au 1 January 2019 to 10 February 2022 megsflowersalbionpark.com.au 1 January 2019 to 10 February 2022 megsflowersauchenflower.com.au 1 January 2019 to 10 February 2022 megsflowersbaldivis.com.au 1 January 2019 to 10 February 2022 megsflowersbalwynnorth.com.au 1 January 2019 to 10 February 2022 megsflowersbankstown.com.au 1 January 2019 to 10 February 2022 megsflowersbanorapoint.com.au 1 January 2019 to 10 February 2022 megsflowersbaulkhamhills.com.au 1 January 2019 to 10 February 2022 megsflowersbeenleigh.com.au 1 January 2019 to 10 February 2022 megsflowersbellavista.com.au 1 January 2019 to 10 February 2022 megsflowersbenowa.com.au 1 January 2019 to 10 February 2022 megsflowersbentleigheast.com.au 1 January 2019 to 10 February 2022 megsflowersberwick.com.au 1 January 2019 to 10 February 2022 megsflowersblackburn.com.au 1 January 2019 to 10 February 2022 megsflowersboronia.com.au 1 January 2019 to 10 February 2022 megsflowersboxhill.com.au 1 January 2019 to 10 February 2022 megsflowersbrackenridge.com.au 1 January 2019 to 10 February 2022 megsflowersbridgemandowns.com.au 1 January 2019 to 10 February 2022 megsflowersbrighton.com.au 1 January 2019 to 10 February 2022 megsflowersbroadbeach.com.au 1 January 2019 to 10 February 2022 megsflowersbrunswick.com.au 1 January 2019 to 10 February 2022 megsflowersbulimba.com.au 1 January 2019 to 10 February 2022 megsflowersbundoora.com.au 1 January 2019 to 10 February 2022 megsflowersburpengary.com.au 1 January 2019 to 10 February 2022 megsflowerscaloundra.com.au 1 January 2019 to 10 February 2022 megsflowerscamberwell.com.au 1 January 2019 to 10 February 2022 megsflowerscamperdown.com.au 1 January 2019 to 10 February 2022 megsflowerscanningvale.com.au 1 January 2019 to 10 February 2022 megsflowerscaringbah.com.au 1 January 2019 to 10 February 2022 megsflowerscarnegie.com.au 1 January 2019 to 10 February 2022 megsflowerscarrumdowns.com.au 1 January 2019 to 10 February 2022 megsflowerscastlehill.com.au 1 January 2019 to 10 February 2022 megsflowerschadstone.com.au 1 January 2019 to 10 February 2022 megsflowerscheltenham.com.au 1 January 2019 to 10 February 2022 megsflowerschermside.com.au 1 January 2019 to 10 February 2022 megsflowersclaremont.com.au 1 January 2019 to 10 February 2022 megsflowersclayton.com.au 1 January 2019 to 3 July 2020 megsflowerscobram.com.au 1 January 2019 to 10 February 2022 megsflowerscoburg.com.au 1 January 2019 to 10 February 2022 megsflowerscoorparoo.com.au 1 January 2019 to 10 February 2022 megsflowerscrowsnest.com.au 1 January 2019 to 10 February 2022 megsflowerscroydon.com.au 1 January 2019 to 10 February 2022 megsflowerscurrimundi.com.au 1 January 2019 to 10 February 2022 megsflowersdandenong.com.au 1 January 2019 to 10 February 2022 megsflowersdarlinghurst.com.au 1 January 2019 to 10 February 2022 megsflowersdeakin.com.au 1 January 2019 to 10 February 2022 megsflowersdeewhy.com.au 1 January 2019 to 10 February 2022 megsflowersdocklands.com.au 1 January 2019 to 10 February 2022 megsflowersdrummoyne.com.au 1 January 2019 to 10 February 2022 megsflowerseastmaitland.com.au 1 January 2019 to 10 February 2022 megsflowerseastmelbourne.com.au 1 January 2019 to 10 February 2022 megsflowerseltham.com.au 1 January 2019 to 10 February 2022 megsflowersengadine.com.au 1 January 2019 to 10 February 2022 megsflowersessendon.com.au 1 January 2019 to 10 February 2022 megsflowersevertonpark.com.au 1 January 2019 to 10 February 2022 megsflowersfawkner.com.au 1 January 2019 to 10 February 2022 megsflowersferntreegully.com.au 1 January 2019 to 10 February 2022 megsflowersfitzroy.com.au 1 January 2019 to 10 February 2022 megsflowersfortitudevalley.com.au 1 January 2019 to 10 February 2022 megsflowersgleniris.com.au 1 January 2019 to 10 February 2022 megsflowersglenwaverley.com.au 1 January 2019 to 10 February 2022 megsflowersgreensborough.com.au 1 January 2019 to 10 February 2022 megsflowersgreenslopes.com.au 1 January 2019 to 10 February 2022 megsflowersgreystanes.com.au 1 January 2019 to 10 February 2022 megsflowersgrovedale.com.au 1 January 2019 to 10 February 2022 megsflowershallshead.com.au 1 January 2019 to 10 February 2022 megsflowershawthorn.com.au 1 January 2019 to 10 February 2022 megsflowersheidelberg.com.au 1 January 2019 to 10 February 2022 megsflowershelensvale.com.au 1 January 2019 to 10 February 2022 megsflowersherston.com.au 1 January 2019 to 10 February 2022 megsflowershopperscrossing.com.au 1 January 2019 to 10 February 2022 megsflowershurstville.com.au 1 January 2019 to 10 February 2022 megsflowerskellyville.com.au 1 January 2019 to 10 February 2022 megsflowerskew.com.au 1 January 2019 to 17 August 2020 megsflowerskingswood.com.au 1 January 2019 to 10 February 2022 megsflowerskirwan.com.au 1 January 2019 to 10 February 2022 megsflowerskogarah.com.au 1 January 2019 to 10 February 2022 megsflowerslangwarrin.com.au 1 January 2019 to 10 February 2022 megsflowerslilydale.com.au 1 January 2019 to 10 February 2022 megsflowerslindfield.com.au 1 January 2019 to 10 February 2022 megsflowerslittlemountain.com.au 1 January 2019 to 10 February 2022 megsflowersmalvern.com.au 1 January 2019 to 10 February 2022 megsflowersmaroochydore.com.au 1 January 2019 to 10 February 2022 megsflowersmaroubra.com.au 1 January 2019 to 10 February 2022 megsflowersmarrickville.com.au 1 January 2019 to 10 February 2022 megsflowersmascot.com.au 1 January 2019 to 10 February 2022 megsflowersmillpark.com.au 1 January 2019 to 10 February 2022 megsflowersmilton.com.au 1 January 2019 to 10 February 2022 megsflowersmonavale.com.au 1 January 2019 to 10 February 2022 megsflowersmooloolaba.com.au 1 January 2019 to 10 February 2022 megsflowersmooneeponds.com.au 1 January 2019 to 10 February 2022 megsflowersmorayfield.com.au 1 January 2019 to 10 February 2022 megsflowersmornington.com.au 1 January 2019 to 10 February 2022 megsflowersmorwell.com.au 1 January 2019 to 10 February 2022 megsflowersmountwaverley.com.au 1 January 2019 to 10 February 2022 megsflowersnambour.com.au 1 January 2019 to 10 February 2022 megsflowersnarangba.com.au 1 January 2019 to 10 February 2022 megsflowersnarrewarren.com.au 1 January 2019 to 10 February 2022 megsflowersnarrewarrensouth.com.au 1 January 2019 to 10 February 2022 megsflowersnerang.com.au 1 January 2019 to 10 February 2022 megsflowersneutralbay.com.au 1 January 2019 to 10 February 2022 megsflowersnewlambton.com.au 1 January 2019 to 10 February 2022 megsflowersnewlambtonheights.com.au 1 January 2019 to 10 February 2022 megsflowersnoosaville.com.au 1 January 2019 to 10 February 2022 megsflowersnorthadelaide.com.au 1 January 2019 to 10 February 2022 megsflowersnorthcote.com.au 1 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Relevant circumstances, including deliberateness and the role of management 20 There is no evidence before the Court that the respondent's directors or senior managers intended to contravene the ACL. However, the parties agreed that some elements of the conduct arose from measures taken by the respondent to enhance its rank in organic Google Search results. 21 The parties noted that training materials produced by the respondent made it apparent that the respondent was aware that there was a risk that customers may form the impression that it was "a little local florist". 22 The parties further noted that the respondent's directors and senior managers had overall managerial responsibility for the respondent's websites and advertisements the subject of the contraventions. However, the parties agreed that the respondent's senior management and directors did not review (adequately or at all) the websites and advertisements which were published on their behalf.

Loss and damage suffered as a result of acts and omissions 23 The parties agreed that the respondent's contravening conduct in making the website local representations and ad local representations was likely to have resulted in two related types of harm: (1) the conduct was likely to have resulted in harm to at least some consumers by denying them the opportunity to make an informed purchasing decision that would ensure that the consumer's purchase would support a local business; and (2) the conduct was likely to have resulted in harm to the respondent's (local) competitors, in the sense that they lost the opportunity to make a sale to any consumers who were enticed to purchase respondent's products, as a result of the false or misleading representations and conduct liable to mislead.

Size of contravener and financial position 24 The respondent is a private company limited by shares. It is part of the Flowerscorp Group. The respondent's revenue in the 2021/2022 financial year was $1,706,439. 25 The parties noted that the revenue of the respondent's parent company, Flowerscorp, is significantly larger than that of the respondent: for example, $54,818,522 for the 2021/2022 financial year. However, the parties have submitted, and I agree, that the proposed penalties represent a significant portion of Flowercorp's net profit after tax: for example, $3,165,458 for the 2021/2022 financial year. The proposed penalty plainly is also a significant proportion of the revenue of the respondent itself.

Prior similar conduct 26 The parties agreed that the respondent has not previously been found to have contravened the ACL.

Cooperation 27 The parties submitted that, prior to the parties filing evidence in the present proceedings, the respondent made full admissions, agreed to the making of all appropriate orders, agreed to the proposed penalty amounts, and joined in the making of submissions which reflected the seriousness of its wrongdoing. 28 The parties agreed that the proposed penalties included an appropriate discount to reflect the cooperation of the respondent.

The proposed pecuniary penalties are appropriate 29 Having regard to all of the factors above, the parties submitted, and I agree, that penalties totalling $1,000,000.00 are appropriate for the following reasons: The proposed penalties reflect the seriousness of the contravening conduct. The false or misleading representations (the website local origin representations and ad local origin representations) had the effect of exploiting consumers' desires to support local businesses; they formed a central part of the respondent's marketing to consumers across its website and Google Advertisements over a three-year period; and they occurred under the oversight of senior management. The proposed penalties are necessary and sufficient: (a) to remind other retailers of the importance of ensuring that advertising and communications with consumers do not contain misleading or false information; and (b) to send a clear message that advertising campaigns relating to the location of businesses must be accurate. The penalties are of a sufficient quantum having regard to the respondent and its parent company's profits in the Relevant Period, such that the penalties would not be regarded as "an acceptable cost of doing business". The penalties make proper allowance for the considerations that the respondent's conduct did not result in direct financial loss to customers, that the respondent has cooperated in the proceedings, and that the respondent has agreed to injunctive and non-punitive orders to improve its compliance.

Declarations of contraventions 30 The respondent's contraventions of ss 18, 29(1)(k) and 33 of the ACL are established by the Statement of Agreed Facts. 31 I agree that is appropriate for the declarations as to those contraventions to be made in the terms set out in the Proposed Orders.

Publication order 32 The Court is empowered under s 246(2)(d) of the ACL to order that a respondent publish a notice regarding its contravening conduct. 33 I consider that it is in the public interest for the respondent in this case to publish a notice in the form set out in Attachment A to the Proposed Orders. This is because of the widespread nature of the website local origin representations and the ad local origin representations, and the likelihood that these representations were likely to mislead consumers.

Compliance program 34 The Court is empowered under s 246(2)(b) of the ACL to order that a respondent establish and implement a compliance program to assist in ensuring that it avoids future contraventions of the ACL. Importantly, s 246(1) requires: 246 Non‑punitive orders (1) A court may, on application of the regulator, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in conduct that: (a) contravenes a provision of Chapter 2, 3 or 4; or (b) constitutes an involvement in a contravention of such a provision. 35 In the present case, the necessary preconditions to s 246(2)(b) were met as the order: (1) is sought by the regulator in relation to a person who has contravened provisions of Chapters 2 and 3 of the ACL; and (2) has the purpose of ensuring that the respondent does not engage in the same conduct, or similar or related conduct, for a period not exceeding three years. 36 The parties submitted, and I agree, that the proposed compliance program order is appropriate for the following reasons: It has a clear nexus to the contravening conduct. It will enhance company-wide awareness of responsibilities and obligations in relation to the contravening conduct, or similar or related conduct, by requiring the respondent to regularly review and identify areas for improving its compliance measures, with a view to minimising the risk of similar conduct occurring in the future. It is in the public interest that Meg's Flowers be required to establish a compliance program, having regard to the wrongdoing in the present case and, in particular, the fact that the conduct occurred over a lengthy period of time. 37 In this respect, I note comments of this Court in Australian Competition and Consumer Commission v Sontax Australia (1988) Pty Ltd [2011] FCA 1202 at [36].

costs 38 The respondent has agreed to make a contribution of $50,000 towards the applicant's costs of the proceeding, to be paid within 30 days of the date of the Court's order. This amount does not reflect the applicant's actual costs in the matter, but the applicant is prepared not to fully pursue its costs given the agreed nature of the resolution. 39 I consider it appropriate to make the costs order in the terms sought by the parties. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Acting Chief Justice Collier.

At a glance

Court

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Judgment (19 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (7)