The Full Australian Federal Court recently upheld the decision that Kimberly-Clark’s Kleenex Cottonelle Flushable Cleansing Cloths (Kleenex Wipes) did not make false or misleading claims in using the word ‘flushable’.  The guidance on the evidence required and weight given to complaints is instructive for New Zealand entities making environmental claims.

Background

The Australian Competition and Consumer Commission (ACCC) alleged that Kimberly-Clark made false and misleading representations regarding the flushability of its Kleenex Wipes because those wipes caused harm to sewerage systems and were not suitable for flushing.

In June 2019, the Federal Court found that while the Kleenex Wipes were inferior to standard toilet paper, they did not cause the harm alleged and the representations were not misleading or deceptive. The ACCC appealed and in June this year, the Full Federal Court upheld the primary judge’s decision.

The Appeal

The ACCC advanced eight grounds in support of its appeal:

The representations made

The ACCC alleged that Kimberly-Clark represented that the Kleenex Wipes had similar characteristics to toilet paper and would break up or disintegrate in a similar manner and timeframe. The ACCC said that the primary judge had failed to give sufficient weight to the representations made that the Kleenex Wipes were “flushable”; would “break down” in sewerage systems or septic tanks; are “able to be flushed in the toilet”; are “completely flushable”; “will break up in the sewerage or septic system like toilet paper”; are “safe to flush”; are “suitable for use in properly maintained sewerage systems and commercial septic tanks”; and a pictorial representation showing breakdown of the wipes.

The Court found that the primary judge had correctly focused on what the ordinary reasonable consumer would have understood from the totality of the conduct. Those representations, when read in context, did not convey that the Wipes had similar characteristics to toilet paper when flushed or that they would break up or disintegrate in a manner and timeframe similar to toilet paper.

The extent of harm caused

The ACCC argued that it was not necessary to establish that the Kleenex Wipes caused harm, it was sufficient that the Wipes posed a real risk of harm or had the potential to cause harm. The Court rejected this argument. First, the ACCC’s case at trial was that the Wipes caused harm and it could not change its case now. Secondly, most things accepted to be flushable (including toilet paper) entail some risk of blockage and harm.  There was no greater risk caused by the Kleenex Wipes.

The ACCC also argued that the primary judge had erred in finding, against the weight of evidence, that Kleenex Wipes did not present a real risk of blockages in household plumbing or sewerage over and above the risk of toilet paper.

The primary judge recognised that Kleenex Wipes dispersed more slowly than toilet paper and posed a greater risk of snagging, clumping, and causing blockages than toilet paper but the appellate court found that this did not mean that Kleenex Wipes posed a materially greater risk of harm.

Weight given to complaints

The ACCC argued that the primary judge failed to give sufficient weight to complaints received by Kimberly-Clark. The Court found that the primary judge did not err in this regard as the complaints had not been tested for veracity and no evidence had been adduced from the complainants regarding blockages. In any event, there were only 26 complaints and “hundreds of millions of wipes” sold.

Guidelines for assessing ‘flushability’

The ACCC alleged that the guidelines used by Kimberly-Clark provided an insufficient framework for assessing flushability particularly because the guidelines were not independent and had been prepared by industry participants without input from wastewater authorities.

However, the appellate court noted that the primary judge found that the Kleenex Wipes had been tested against relevant industry guidelines and had also been subject to extensive, real-world testing. The primary judge had not ignored the fact that the industry guidelines were prepared by industry participants but noted that the fact that the developers of the guidelines were scientists. In contrast, the ACCC had not adduced evidence that the Kleenex Wipes would have failed international standards.

What does this mean for us?

Suppliers of goods and services should take care to ensure that claims about the environmental impact and lifecycle of their products are accurate. Suppliers should carefully check whether they can support the claims they make in relation to their goods and services. In this decision, both Courts were heavily influenced by the fact that the Kleenex Wipes met the threshold of industry guidelines as well as additional stringent testing.

Environmental claims are an area of focus for the New Zealand Commerce Commission and we know that the Commission finds it hard to walk by conduct that the ACCC has taken issue with. The Commission released its Guidelines on Environmental Claims in July this year. Traders looking to make environmental claims should become familiar with these Guidelines and ensure their claims are accurate and can be substantiated. Those guidelines can be accessed here and are covered in our update here.