By Joe Lederman and Charles Fisher On 30 April 2009, the High Court of Australia handed down a decision which limited the legal protection previously provided to advertisers or publishers of false or misleading information. Up till now, a publisher or media outlet was generally exempt from liability under the Trade Practices Act if merely reporting a statement that turns out to be false. This article explores the new legal understanding of the "publisher's defence" and highlights when legal protection may not be available. Although the High Court decision was not dealing with food, there may be circumstances where a media outlet or publisher will face the same issue in relation to endorsed food products or food-related services. The Publisher’s Defence By way of background, Sections 52, 53 and 55 of the Trade Practices Act 1974 prohibit companies from engaging in misleading or deceptive conduct, or conduct which is likely to mislead or deceive. Section 65A of the Trade Practices Act 1974 (Cth) furthermore states that the provisions in the Act prohibiting misleading and deceptive conduct do not apply to “a prescribed publication of matter by a prescribed information provider”. Therefore, a prescribed information provider would not be held legally liable for reporting facts that were false or misleading, so long as the report was not an advertisement or a promotion of goods or services. The High Court's decision in the "Today Tonight" case The Australian Competition and Consumer Commission (‘ACCC’), the government agency empowered under the Trade Practices Act to enforce Sections 52, 53 and 55, had instigated proceedings against Channel Seven in relation to statements aired in two news stories on Channel Seven’s ‘Today Tonight’ program. These news stories were about a property investment and mentoring program being run by two women. This investment and mentoring program went by the name of ‘Wildly Wealthy Women’. The women promoting their program had proposed to Channel Seven, and reached an agreement, that Today Tonight would follow the progress of their investment program through a series of news stories over nine months. Several representations to the effect that the women were millionaires and that they owned a large number of properties were not true and held to be misleading or deceptive. Channel Seven claimed to rely on the abovementioned exception to Section 52, being the publisher's defence in Section 65A as a ‘prescribed information provider’. On 30 April 2009, the High Court of Australia handed down its judgement in ACCC v Channel Seven Brisbane Pty Ltd [2009] HCA 19, finding that the Section 65A exception did not apply in that case because Channel Seven had published misleading or deceptive representations pursuant to an arrangement with a supplier of goods or services (the women offering the mentoring and training services. The majority of the High Court found that the exception under section 65A applied not only to misleading and deceptive representations only in relation to goods or services of a kind supplied by that prescribed information provider, but also meant there was no exception to the Trade Practices Act for representations made in relation to any goods or services where the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with the person who supplies the goods or services. The fact that these stories aired in late 2003 and early 2004 and the decision was handed down in April 2009 reveals the ACCC’s commitment to getting a High Court decision on this issue. Significance for food businesses This decision allows the ACCC greater scope to take action against misleading or deceptive conduct, particularly in cases where a promotional or advertising campaign includes reports on news programs by “prescribed information providers”. Some of these potential scenarios are discussed as follows: Advertorial An advertorial, which is an advertisement in the style of an editorial comment or news item, was considered in the case to fall within the advertisement and third party promotion subsections of section 65A. This is important for food suppliers and marketers to know as many food businesses use advertorials as part of their promotion campaigns, such as the Brand Power advertisements on television. Section 52 of the Trade Practices Act requires that representations made in trade and commerce, including advertorial, not be misleading or deceptive. The statement or publication in question does not even have to be the subject of the agreed promotion for supply of goods or services. The Trade Practices Act provisions will still apply to “a publication of a matter in connection with the supply or possible supply of goods or services” (section 65A(1)(a)(i)). Following ACCC v Channel Seven, it is clear that a broadcaster or other media outlet cannot rely on the ‘publisher’s safe-harbour’ of the section 65A exception in relation to third-party promotion, for example information which is presented as ‘news’, or as impartial where the goods or services are mentioned because of a pre-arranged agreement. General claims relating to food or diet requirements Where general information about a food product or service is reported as fact but where the separate vested interest between the publisher and the supplier of the food product or service is not declared, it is clear from ACCC v Channel Seven that in these circumstances a publisher will not be able to claim a legal defence under section 65A. The Trade Practices Act has always applied to prohibit misleading health claims that businesses may make about their products and brand. The exception under section 65A only applies to any ‘prescribed information providers’ who “carry on a business of providing information”. Therefore any food business that does not fall within the definition of a “prescribed information provider” would always have had to comply with the Trade Practices Act anyway in relation to any information they publish themselves. However, the broad approach to Section 65A taken by the High Court in the Today Tonight decision means that a food business ought to be cautious even when making general dietary claims or nutrition claims, even when not specifically about their own brand of product. If a food supplier or food business comes to an arrangement with a media outlet to provide information that relates to any product or service of a kind supplied by the party to the agreement but being marketed under the guise of reporting, the media outlet may still be liable for any misleading or deceptive statements or representations made. For example, a supplier of oranges may pay for a ‘news report’ which promotes the general health benefits of eating fruit such as oranges, but does not specifically advertise their brand of oranges. If any representations in that ‘report’ misleading or deceptive, the media provider would not be protected under Section 65A. Checklist The following checklist is designed to provide guidance, following the High Court’s ACCC v Channel Seven decision, as to where publications about the supply of goods or services will not fall into the section 65A exception and therefore still be capable of breaching the Trade Practices Act prohibition on any misleading or deceptive conduct. (1) Where: - then that publication will still be subject to Part V of the Trade Practices Act . (2)Where: - then that publication will still be subject to Part V of the Trade Practices Act.
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