LG To Compensate Consumers

• LG didn’t test refrigerators properly
• It will compensate consumers who bought affected fridges
• LG will upgrade trade practices program

LG Australia has provided the Australian Competition and Consumer Commission (ACCC) with a court enforceable undertaking after concerns that LG may have breached the Trade Practices Act 1974 by misrepresenting the Comparative Energy Consumption (CEC) of various refrigerator models.

Over 2007 and 2009, LG applied for energy label registrations for three refrigerator models, all of which included an energy saving feature which switches the refrigerator to a more energy efficient mode of operation, storage mode, when it is left for a sustained period without opening the refrigerator door.

LG did not remove or disable the storage mode during testing prior to applying for the energy labels. These initial tests indicated a CEC of 738kWh/year. Subsequent tests conducted by LG showed a CEC of 820kWh/year when storage mode is disabled. The ACCC conducted an investigation as to whether LG Australia's marketing of the various models with a CEC of 738kWh/year gave rise to concerns under the Act.

In particular, the ACCC was concerned that:

• LG may have represented that the CEC of the various models was 738kWh/year when it was not.
• The company may have represented that the CEC of the various models was lower that it was.
• LG may have misled the public as to the energy efficient characteristics of the various models.
• LG’s compliance program did not pick up and/or prevent the conduct from occurring.

In March 2010, LG Australia announced that it would offer all consumers who bought one of the refrigerator models compensation. As part of the undertaking, LG will keep this compensation offer open until at least November 2010.

In addition, LG has undertaken to establish and implement an upgraded trade practices law compliance program, and conduct additional testing on a selection of refrigerators, televisions, clothes washers, clothes dryers and dishwashers prior to release into the Australian market.