Can I write an arti­cle about my busi­ness competitor?

In Brief

In the course of doing busi­ness, you are not allowed to engage in mis­lead­ing or decep­tive con­duct. But what if you utilise your per­son­al exper­tise and expe­ri­ence to make gen­er­al com­ments about your indus­try – for instance, by pub­lish­ing an arti­cle in a trade mag­a­zine, or deliv­er­ing a pub­lic lec­ture? These sorts of activ­i­ties are often half-mar­ket­ing, half-not. So what can and can’t you say? And what are the risks involved? The Full Court of the Fed­er­al Court recent­ly con­sid­ered this ques­tion in Fletch­er v Nex­tra Aus­tralia Pty Ltd.^[1]

What hap­pened?

Mr Fletch­er oper­at­ed a newsagency, had a 50% stake in a newsagency fran­chisor called newsX­press Pty Ltd, owned a soft­ware com­pa­ny which pro­duced soft­ware for newsagents, and also oper­at­ed the Aus­tralian Newsagency Blog, which con­tained arti­cles and com­men­tary on the industry. 

On 27 April 2011, Mr Fletch­er pub­lished a blog post enti­tled ​“Nasty cam­paign from Nex­tra mis­leads newsagents” con­cern­ing a fly­er cre­at­ed and dis­trib­uted by Nex­tra Aus­tralia Pty Ltd, the fran­chisor of the Nex­tra Group (Fly­er).

Nex­tra Group was a com­peti­tor of newsX­press. Nex­tra Group pro­vid­ed two dif­fer­ent fran­chise ser­vices – Nex­tra, which Mr Fletch­er con­sid­ered to be sim­i­lar to the ser­vice pro­vid­ed by newsX­press, and News Extra, which pro­vid­ed more lim­it­ed ser­vices com­pared to Nex­tra.^[2] The fly­er con­tained tes­ti­mo­ni­als from fran­chisees who had left their pre­vi­ous fran­chise arrange­ments and switched to either of Nex­tra Group’s services.

In his blog post, Mr Fletch­er stat­ed, among oth­er things, that the Fly­er did not spec­i­fy whether fran­chisees who moved to Nex­tra Group moved to Nex­tra or News Extra.^[3] He stat­ed that the Fly­er con­tained ​“some false and mis­lead­ing infor­ma­tion”.^[4] In the blog post, he also dis­closed he was a direc­tor of newsXpress.

Nex­tra sued Mr Fletch­er, argu­ing that the blog post con­sti­tut­ed mis­lead­ing or decep­tive con­duct in trade and com­merce with­in the mean­ing of sec­tion 18 of the Aus­tralian Con­sumer Law^[5] due to a num­ber of rep­re­sen­ta­tions in his blog post, one of which was Mr Fletcher’s state­ment that the Fly­er did not spec­i­fy whether fran­chisees who moved to Nex­tra Group moved to Nex­tra or News Extra (Rep­re­sen­ta­tion).

Nex­tra Group was suc­cess­ful before the pri­ma­ry judge. Mr Fletch­er appealed to the Full Fed­er­al Court on the basis that the pri­ma­ry judge was wrong in find­ing that Mr Fletcher’s pub­lish­ing of the blog post was con­duct ​“in trade or com­merce”, and in rela­tion to the find­ings regard­ing the state­ments in the blog post, includ­ing the represenation. 

What did the Full Fed­er­al Court decide?

The Full Court agreed with the pri­ma­ry judge’s find­ing that the Rep­re­sen­ta­tion was mis­lead­ing and decep­tive.^[6]

Mr Fletch­er argued that his blog post did not amount to con­duct in trade or com­merce because of, among oth­er things, the following:

1. the blog post was ​“not such as to amount to ​‘pro­mo­tion­al activ­i­ties in rela­tion to, or for the pur­pos­es of, the sup­ply of goods or ser­vices to actu­al or poten­tial con­sumers’ “;^[7]
2. “he had a legit­i­mate inter­est in chal­leng­ing the con­tent of the Fly­er which was whol­ly sep­a­rate from his own busi­ness inter­ests” and ​“he had devel­oped a rep­u­ta­tion as an author­i­ta­tive com­men­ta­tor on newsagency issues in Aus­tralia”;^[8]
3. the blog was ​“not oper­at­ed as a com­mer­cial ser­vice, but as a ​‘forum for dis­cus­sion, infor­ma­tion and debate con­cern­ing newsagency issues’ “;^[9] and
4. the blog post was “ ​‘part of an indus­try pub­li­ca­tion and to be dis­tin­guished from a pub­li­ca­tion direct­ed sole­ly to his com­mer­cial inter­ests’ “.^[10]

The Full Court found that Mr Fletcher’s pub­lish­ing of the blog post was in trade and com­merce. It was held that Mr Fletcher’s dis­clo­sure that he was a direc­tor of newsX­press indi­cat­ed that Mr Fletcher’s attack on the Fly­er ​“should not be regard­ed as ema­nat­ing from some­one with an inde­pen­dent objec­tive view­point, but rather, from a com­peti­tor in the same indus­try who was con­cerned about his own and oth­er poten­tial fran­chisees being mis­led by false state­ments made by Nex­tra”.^[11] The Full Court dis­tin­guished this case from many of the author­i­ties upon which Mr Fletch­er sought to rely, and found that Mr Fletch­er ​“was an active par­tic­i­pant in the news­pa­per fran­chise indus­try and intend­ed his con­duct to have an impact on trad­ing or com­mer­cial activ­i­ties”.^[12]

What are the impli­ca­tions for me and my business?

If you run a busi­ness and pub­lish arti­cles about the indus­try in gen­er­al, it is impor­tant to be aware that there is a fine line between gen­er­al com­ment and com­mer­cial con­duct. One of the pri­ma­ry con­sid­er­a­tions is whether your arti­cles are com­mer­cial­ly moti­vat­ed or not. 

The Court’s deci­sion should also remind busi­ness own­ers to mon­i­tor news­pa­pers, mag­a­zines, jour­nals and indus­try web­sites to ensure that your brand is not being dam­aged by the mis­lead­ing or decep­tive con­duct of com­peti­tors. If the own­er of a com­peti­tor makes mis­lead­ing state­ments about your busi­ness you should obtain legal advice to deter­mine what action you can take to pre­vent, min­imise or ame­lio­rate dam­age to your business.

Last­ly, one should not read the Court’s deci­sion as an indict­ment of dis­clos­ing a per­son­al inter­est in any com­men­tary you pub­lish. Whilst Mr Fletcher’s dis­clo­sure state­ment was a key fac­tor in the Full Court’s find­ing that the blog post had a com­mer­cial char­ac­ter, one can­not escape lia­bil­i­ty sim­ply by leav­ing the dis­clo­sure state­ment out. Courts will look to a wide range of fac­tors – the pres­ence of a dis­clo­sure state­ment is only one. Fur­ther­more, if you omit a dis­clo­sure state­ment you risk seri­ous­ly dam­ag­ing your cred­i­bil­i­ty as a trust­ed indus­try commentator.