Advertising Agency Off The Hook For Misleading Advertisements

On 25 February 2004, the Full Court of the Federal Court unanimously dismissed an appeal by the Australian Competition and Consumer Commission (ACCC) against the decision of Justice Jacobson in Cassidy v NRMA Health Pty Ltd [2002] in which his Honour held that Saatchi & Saatchi Australia Pty Limited (Saatchi) was not liable for advertisements which it created and developed for NRMA Health Pty Limited and NRMA Insurance Limited (NRMA) notwithstanding that those advertisements were misleading or deceptive.

The appeal dealt with the question of whether an advertising agency which creates and prepares a misleading advertisement for a client contravenes section 12DA of the Australian Securities & Investments Commission Act 2001 (Cth) (the new ASIC Act) as a principal, even though its client has final approval of the form and arranges for publication of the advertisement.