Woolworths has been hit with a $3 million penalty for selling faulty home-brand goods that injured consumers and for failing to promptly alert authorities and issue recalls as required by law.
In his penalty judgement delivered on Friday, Justice James Edelman said the penalty needed to achieve deterrence and ensure Woolworths sold safe products and followed product recall and withdrawal procedures.
ACCC takes on Woolies over safety
Roger Ailes leaves Fox
Q2 CPI to cement a rate cut?
Is Rupert Murdoch loosening the reins?
Shoplifting at self-service checkouts
Is the Australian economy at an inflection point?
The Good Guys attracts sale bid
ACCC takes on Woolies over safety
Woolworths has been misleading consumers about the safety of some of its branded goods the consumer watchdog has alleged in the Federal Court.
Woolworths' failure to do so had led to a baby "burning a hole" in her leg, an employee burning his eyes and a man hitting his head on a metal garage door and the concrete ground.
"The contraventions in this case involved different conduct and different events ... the most serious contravening conduct by Woolworths stemmed from the same systemic conduct in a broad sense," he said.
"As Woolworths described that conduct it involved misrepresentations about the characteristics of some of its products, refraining from withdrawing products within a reasonable time and refraining from recalling unsafe products within a reasonable time."
Woolworths has issued a "sincere apology" to customers.
The ACCC first launched proceedings in September 2014, alleging Woolworths made false or misleading representations about the safety of some home-brand products, including a drain cleaner with a faulty child-proof lid, a deep fryer with weak handles and self-igniting safety matches, by continuing to sell them after injury reports, over a three-year period.
In regards to a padded flop chair, Justice Edelman said Woolworths made false or misleading claims because it was described as being able to bear the weight of 115 kilograms when it could not reliably support more than 92 kilograms.
The ACCC had argued for the penalty to be $4 million. Woolworths fought for about half that.
"[Woolworths] cooperated with the ACCC, and agreed many of the facts," Justice Edelman said. "[The penalty was reduced because of its] early admission of culpability and its co-operation with the ACCC."
Rod Sims, chairman of the ACCC, believed the penalty was "entirely appropriate". While some may think the penalty is small compared to the supermarket giant's massive profits, he said the damage to its reputation should not be underestimated.
The legal action followed remarks by Mr Sims in 2013 that many businesses needed to improve their safety compliance programs because the trend towards greater sourcing of cheap products from overseas by retailers correlated with an increase in injuries and recalls.
"I'm worried that probably [not much has changed since then]. We still have a lot of safety issues here, such as the Infinity Cable issue. There needs to be more checking by companies that the goods they are selling are safe," he said.
An 11-month-old girl managed to pop off the child-proof lid on the drain cleaner and "burned a hole" in her leg. A Woolworths employee suffered burns to his eyes.
In regard to the deep fryer, a Lake Macquarie woman suffered serious burns when the handles snapped off and hot oil splashed onto her body, court documents show.
Woolworths swiftly acknowledged the screw and screw pillar attaching the handle were weak, but failed to notify authorities within two days of finding out, as legally obliged.
It emerged in court that 124,000 people over seven months were exposed to the drain cleaner, which Woolworths admitted was the "most serious of the misleading conduct contraventions".
A Woolworths spokesman said it acknowledged the failures in its quality processes and apologised to customers.
"The issues were raised at the highest levels within the company and we have invested more than $20 million on an entirely new product lifecycle management system, implemented over two years, to ensure our products are the quality our customers expect," he said.
"Woolworths takes product safety and quality extremely seriously. Australians buy millions of items from us every day and we know they rely on Woolworths to provide safe, high-quality products."
The home-brand products under recall are the Abode 3-litre stainless steel deep fryer with loose handles, Woolworths Select 1-litre drain cleaner with a faulty child-proof lid and a 10-pack bundle of Safety Matches, as well as a Home Collection padded flop chair and Masters Home Improvement folding stepping stool.
Woolworths has been ordered to pay $3.057 million for breaching Australian Consumer Law. The retailer will also implement an upgraded dedicated product safety compliance program, provide a link to product safety requirements on its websites and publish on its app the details of all products currently recalled by Woolworths and those recalled within the last 12 months.