Advertising Claims Must be Substantiated: Insights from Cantarella Bros Pty Ltd v Valcorp Fine Foods Pty Ltd

Competition & Trade Regulation
1 minute read

A recent court decision is a good reminder of the need to take care before making claims in advertisements that a product is 'Australia's No 1', 'Top selling' or the 'Market leader'.

Cantarella, the distributor of Vittoria coffee, successfully brought an action under section 52 of the Trade Practices Act 1974 (Cth) against Valcorp, the distributor of LavAzza coffee (Cantarella Bros Pty Ltd v Valcorp Fine Foods Pty Ltd [2002] FCA 8).

The Federal Court decided that two of the three disputed LavAzza advertisements were misleading or deceptive, or likely to mislead or deceive readers in breach of section 52. The decision was based on a comparison of the claims made in the advertisements and the actual sales data of LavAzza coffee measured by value, volume and/or number of 'bricks' of coffee sold.

The advertisements had attempted to use disclaimers to qualify the claims. However, the Court said these were not sufficient because in one advertisement there was no asterisk to link the disclaimer with the claim, and in the other advertisement the asterisk was not clearly marked or positioned appropriately.

Implications of this decision include a reminder of the need to:

  • have adequate and reliable sales data to substantiate all claims made in advertisements, particularly claims to market position or sales dominance

  • consider the readership of the advertisement and how this may affect the use of language and qualifications

  • ensure any disclaimers are clearly marked and positioned.

This newsletter provides a summary only of the subject matter covered, without the assumption of a duty of care by Freehills. The summary is not intended to be nor should it be relied on as a substitute for legal or other professional advice.