The Federal Court today fined Dimmeys Stores Pty Ltd $60 000 for supplying children's bicycle which failed to comply with the mandatory consumer product safety standard for pedal bicycles. The importer of the bicycles, Starite Distributors Pty Ltd, was also fined $30 000.
The orders follow criminal proceedings instituted by the Australian Competition and Consumer Commission against the companies for contravening section 65C(1)(a) of the Trade Practices Act 1974. Section 65C(1)(a) prohibits a corporation from supplying goods that are intended to be used, or are of a kind likely to be used, by a consumer if the goods are of a kind in respect of which there is a prescribed consumer product safety standard and which do not comply with that standard.
It was alleged that the BMX style bicycles, which were sold under the brand name of Star Wheel between August and November of last year, were not fitted with two brakes (they were only fitted with a back-pedal brake), a bell and wheel reflectors nor supplied with a manual for their use and maintenance, as required by the standard. Further the bicycles, which were styled to look like off-road bicycles, did not carry the required warning that they were not designed for off-road use or for stunting.
It was also alleged that the drive chain, seat adjustment clamps and handlebar assembly of one of the bicycles that the ACCC had tested failed to comply with the performance requirements of the standard.
Dimmeys and Starite pleaded guilty to the offences.
In his judgment Justice Weinberg noted that neither company made any inquiry as to whether there may have been a consumer product safety standard applicable to bicycles although they were aware of the existence of product safety standards in relation to other merchandise typically handled by them. He considered the companies' failure to make the appropriate inquiries in relation to the bicycles was simply inexcusable.
In his judgment Justice Weinberg made the following comments:
'The offences committed by Starite and Dimmeys must, in my opinion, be regarded as being extremely serious. The conduct of the defendants has resulted in a significant number of defective bicycles being supplied to children, among the most vulnerable members of our community. The appearance of these bicycles is calculated to entice those who use them into still more danger. It may fairly be said that each of the bicycles supplied was, and is, an accident waiting to happen'.
In determining penalty Justice Weinberg took into account that the beneficial owners of Starite also have a substantial interest in Dimmeys. He considered that this fact warranted the imposition of a somewhat lower penalty than would otherwise be merited upon Starite.
'Dimmeys responded quickly and cooperatively when requested by the ACCC to stop selling the bicycles and spent approximately $25,000 in conducting a product recall to ensure that further risk to consumers was reduced,' ACCC Chairman, Professor Allan Fels said today.
'However, a recall is a second best outcome. The preferred outcome is for non-complying goods never to be supplied.
'The product recall conducted by Dimmeys did not result in all bicycles being returned to the company. Consumers who still have the bicycles should return them to Dimmeys for a full refund.
'The ACCC will continue to take strong enforcement action on product safety issues, particularly where the safety of children is involved.
'This case sends a strong message to all suppliers, but especially to discount variety store companies. Stores that deal in a wide range of merchandise must take responsibility for ensuring the safety of the goods they sell and that any mandatory safety standards are observed,' he said.
The orders follow criminal proceedings instituted by the Australian Competition and Consumer Commission against the companies for contravening section 65C(1)(a) of the Trade Practices Act 1974. Section 65C(1)(a) prohibits a corporation from supplying goods that are intended to be used, or are of a kind likely to be used, by a consumer if the goods are of a kind in respect of which there is a prescribed consumer product safety standard and which do not comply with that standard.
It was alleged that the BMX style bicycles, which were sold under the brand name of Star Wheel between August and November of last year, were not fitted with two brakes (they were only fitted with a back-pedal brake), a bell and wheel reflectors nor supplied with a manual for their use and maintenance, as required by the standard. Further the bicycles, which were styled to look like off-road bicycles, did not carry the required warning that they were not designed for off-road use or for stunting.
It was also alleged that the drive chain, seat adjustment clamps and handlebar assembly of one of the bicycles that the ACCC had tested failed to comply with the performance requirements of the standard.
Dimmeys and Starite pleaded guilty to the offences.
In his judgment Justice Weinberg noted that neither company made any inquiry as to whether there may have been a consumer product safety standard applicable to bicycles although they were aware of the existence of product safety standards in relation to other merchandise typically handled by them. He considered the companies' failure to make the appropriate inquiries in relation to the bicycles was simply inexcusable.
In his judgment Justice Weinberg made the following comments:
'The offences committed by Starite and Dimmeys must, in my opinion, be regarded as being extremely serious. The conduct of the defendants has resulted in a significant number of defective bicycles being supplied to children, among the most vulnerable members of our community. The appearance of these bicycles is calculated to entice those who use them into still more danger. It may fairly be said that each of the bicycles supplied was, and is, an accident waiting to happen'.
In determining penalty Justice Weinberg took into account that the beneficial owners of Starite also have a substantial interest in Dimmeys. He considered that this fact warranted the imposition of a somewhat lower penalty than would otherwise be merited upon Starite.
'Dimmeys responded quickly and cooperatively when requested by the ACCC to stop selling the bicycles and spent approximately $25,000 in conducting a product recall to ensure that further risk to consumers was reduced,' ACCC Chairman, Professor Allan Fels said today.
'However, a recall is a second best outcome. The preferred outcome is for non-complying goods never to be supplied.
'The product recall conducted by Dimmeys did not result in all bicycles being returned to the company. Consumers who still have the bicycles should return them to Dimmeys for a full refund.
'The ACCC will continue to take strong enforcement action on product safety issues, particularly where the safety of children is involved.
'This case sends a strong message to all suppliers, but especially to discount variety store companies. Stores that deal in a wide range of merchandise must take responsibility for ensuring the safety of the goods they sell and that any mandatory safety standards are observed,' he said.