One party claimed that the campaign was "misleading and deceptive"
The Court of Appeal has upheld the affirmative defences raised in a dispute involving allegations of a "misleading and deceptive" campaign against a carpet manufacturer.
Bremworth Carpets and Rugs Ltd and Godfrey Hirst Ltd, competitors in the carpet manufacturing business, were embroiled in a legal battle that concerned Bremworth's "Going Good" campaign, which promoted the shift from synthetic to natural fibre carpets, particularly wool. The campaign cited environmental and health concerns.
Bremworth strategically decided to cease the production of synthetic carpets and focus solely on natural fibre carpets. Their "Going Good" campaign aims to position wool carpets as an eco-friendly and healthier choice. On the flip side, Godfrey Hirst Ltd, a key competitor with a larger market share in New Zealand, still manufactures synthetic carpets. Godfrey Hirst sued Bremworth under the Fair Trading Act 1986, arguing that the "Going Good" campaign was misleading and deceptive.
Bremworth maintained that its campaign was not misleading or deceptive. It also raised affirmative defences:
- it would be inequitable to grant relief because Godfrey Hirst has made similar misleading statements of its own;
- the relief sought by Godfrey Hirst would amount to cartel conduct;
- the relief sought by Godfrey Hirst would amount to taking advantage of unilateral market power and
- Godfrey Hirst's conduct is unconscionable.
The High Court initially struck out Bremworth's affirmative defences, finding they were unrelated to liability. However, the Court of Appeal overturned this decision, acknowledging that the affirmative defenses could impact the relief granted should Godfrey Hirst prove Bremworth's conduct was misleading.
The appeal court's decision highlighted the potential impact of the Fair Trading Act on consumers. While facing conceptual challenges, the court found the affirmative defences relevant as they may demonstrate that Bremworth's claims were not misleading. The court acknowledged its discretionary authority regarding relief, emphasising that Godfrey Hirst's conduct could shape the specific relief granted. The court also underscored that enforcing the Fair Trading Act is generally not anticompetitive unless the claim is excessive.
Ultimately, the court allowed the appeal and set aside the order, striking out Bremworth's affirmative defences.
