Australian Competition and Consumer Commission v Emma Sleep GmbH

This case began as ACCC proceedings about Emma Sleep advertising shown to Australian consumers over a long period, from 15 June 2020 to 27 March 2023. The advertising included what the Court called “Savings Representations” and “Limited Time Sale Representations”. At a practical level, these were claims that products were being sold at discounted prices and that the sale prices were only available for a limited period or during a particular campaign.

Emma Sleep AU admitted that those representations were false, misleading or deceptive, or likely to mislead or deceive, except for one representation that was no longer pressed. So the case was not mainly a fight about whether the Australian company’s sale advertising breached the Australian Consumer Law. That part was largely accepted. The real contest was about who else in the corporate group should also be legally responsible.

The ACCC sued three entities in the Emma Sleep group. Emma Sleep AU was the Australian seller. Emma Sleep GmbH was the German parent. Bettzeit Southeast Asia Inc was a related company incorporated in the Philippines. The Court had to decide whether the parent and the related overseas company were also liable for the admitted contraventions.

The agreed facts described Emma Sleep AU as advertising and supplying mattresses, bed frames, pillows and accessories to Australian consumers, primarily through its website. It also advertised through Facebook, Instagram and email, on third-party retailer websites including Woolworths Everyday Market, and through offline channels such as television, radio, text messages and physical billboards. A product review website called the Top 5 Best Mattress Website was registered to Emma Sleep AU, although it was operated by another subsidiary, DIBMat GmbH, together with Country Team Australia.

Country Team Australia was especially important. It was described as a division or business unit of Emma Sleep AU. It was responsible for Emma Sleep AU’s operations in Australia, including business development, operations and retail or wholesale, and for managing content on online platforms such as the Emma Sleep website, Facebook, Instagram, email and third-party retailer websites. The agreed facts said Country Team Australia was responsible for developing, approving and updating the advertising of Emma Sleep AU’s products on those platforms on behalf of Emma Sleep AU.

The staffing of Country Team Australia mattered because it crossed entity lines. The agreed facts said the team was comprised of persons employed by Emma Sleep AU and Bettzeit. The people occupying the Team Lead position were employed by Bettzeit and Emma Sleep AU. The people occupying the Country Manager or Head of Australia roles, which sat above Country Team Australia, were employed by Bettzeit and were responsible for steering the business operations of Emma Sleep AU.

The agreed facts also recorded broader group arrangements. Emma Sleep GmbH held 99.40% of Bettzeit’s issued share capital, with the remaining 0.60% split evenly between three individuals. Emma Sleep AU was wholly owned by Emma Sleep GmbH. Some directors overlapped across entities. The agreed facts further said that Emma Sleep GmbH directors and senior managers generally provided guidance at a strategy level to Country Team Australia and to the people occupying the Team Lead, Country Manager and Head of Australia roles with respect to Emma Sleep AU’s operations.

There was also a management and administrative service agreement dated 15 March 2021 between Emma Sleep GmbH, Bettzeit and Emma Sleep AU. Under that agreement, Emma Sleep GmbH was appointed to provide specified management services to Emma Sleep AU and Bettzeit, including advice and assistance in marketing business operations and direct services, administrative support and direct services for daily business operations in sales and related activities, and the provision of officers or general administrative services. Emma Sleep GmbH could also subcontract services to other group companies, including Bettzeit and Emma Sleep AU. The agreement was later terminated by addendum, with a retroactive termination date of 1 January 2022. Emma Sleep GmbH also provided financial assistance to Emma Sleep AU through loan and revolving credit arrangements.

The legal issue was not whether a corporate group can ever have more than one liable entity. The Court accepted that two entities can contravene at the same time. The real question was whether the evidence showed that Emma Sleep GmbH and or Bettzeit were involved closely enough in the admitted misleading conduct to be liable either in their own right or through the statutory attribution rule in s 139B(2) of the Competition and Consumer Act.

Section 139B(2) is important in plain language because it can treat conduct as having been engaged in by a company where the conduct was done on that company’s behalf by its director, employee or agent within actual or apparent authority, or by another person acting at the direction of such a director, employee or agent within authority. The Court said the provision contains three distinct concepts: conduct engaged in “on behalf of” a body corporate, conduct within the scope of actual or apparent authority, and conduct done “at the direction of” a director, employee or agent.

The judgment explains that “on behalf of” is not a narrow technical phrase. It can cover conduct done for or as representative of the corporation, or conduct done in the course of the corporation’s business, affairs or activities. But that does not mean the Court can ignore separate corporate personality. The judgment expressly says there is no warrant to dissolve legitimate corporate structures or shift liability wholesale to parent companies just because they own subsidiaries.

The Court also reviewed agency principles. Agency depends on consensual legal relations, not just the fact that one entity performs an important function for another. Control or direction is a key part of the analysis. Actual authority and apparent authority are separate ideas. Apparent authority can arise from the principal’s representations, including by conduct, where the principal permits the agent to act in some way in the conduct of the principal’s business with others.

For s 139B(2)(b)(i), the Court explained that a “direction” can be express or implied and may be inferred from all the circumstances. So in a group-company setting, the Court can look beyond formal labels and ask what the evidence really shows about who was instructing whom, who had authority, and whose business activities the conduct was part of.

Hill J held that Bettzeit also contravened ss 18 and 29(1)(i) of the Australian Consumer Law in respect of the impugned representations. The judgment states that Bettzeit was liable both as a principal contravener and through the operation of s 139B(2)(b)(i) of the Competition and Consumer Act. By contrast, Emma Sleep GmbH was not found to have contravened the Australian Consumer Law.

That distinction is important. The Court did not accept a broad proposition that every company in the Emma group should be liable because the group operated commercially as a connected enterprise. Nor did it accept the opposite proposition that only the Australian trading entity could ever be responsible. Instead, the Court drew a line based on the facts proved and agreed.

The agreed facts showed substantial Bettzeit involvement in the Australian operation through staffing and leadership. Country Team Australia, which developed, approved and updated advertising on behalf of Emma Sleep AU, included Bettzeit employees. Team Lead roles were held by people employed by Bettzeit and Emma Sleep AU. The Country Manager or Head of Australia roles were employed by Bettzeit and were responsible for steering Emma Sleep AU’s business operations. Those facts were enough for the Court to find Bettzeit liable, including under the “at the direction of” limb in s 139B(2)(b)(i).

Emma Sleep GmbH stood differently on the material before the Court. The agreed facts showed ownership, strategic guidance, a service agreement and financial assistance. But the Court did not find that enough to establish liability for the admitted misleading representations. The judgment therefore reinforces that a parent company’s strategic role and financial support do not automatically amount to carrying on, directing or being legally responsible for the specific consumer-facing conduct.

The Court did not determine final relief in this judgment. It ordered that the matter be listed for a case management hearing so arrangements could be made for a later penalty proceeding. So this decision is about liability, not the final penalty outcome.

For businesses, one of the most useful parts of the case is the kind of evidence that featured in the agreed facts. The Court was not deciding liability based only on a group structure chart. It had evidence about who employed the relevant leaders, who steered the Australian business, who developed and approved advertising, what service arrangements existed between entities, and how the group’s management worked in practice.

The agreed facts referred to Country Team Australia’s responsibility for developing, approving and updating advertising on behalf of Emma Sleep AU. They also identified that Bettzeit employees occupied key leadership roles connected to that team and to the steering of Emma Sleep AU’s operations. The agreed facts referred to strategy-level guidance from Emma Sleep GmbH directors and senior managers, and to specific email chains involving senior figures. They also referred to the management and administrative service agreement and to financial assistance arrangements.

That mix of evidence is a practical lesson in itself. In group-company disputes, courts look at the real operating model. Formal ownership is relevant, but it is rarely enough on its own. Businesses should expect close attention to employment arrangements, reporting lines, approval workflows, service agreements, internal communications, delegated authority, and the actual role played by local and offshore personnel.

If your business uses a shared services model, ask whether the documents match reality. If the Australian entity is named on the website but another entity’s employees are effectively running the campaigns, approving content or directing local staff, that may become central evidence. If local directors exist mainly to satisfy registration requirements and are not involved in day-to-day operations, that may also affect how a court understands the real control structure.

The first reading point is straightforward. If you advertise a saving, discount or sale price, there must be a real basis for that claim. If you tell consumers the offer is available only for a limited time, the time limit must be genuine in the way an ordinary consumer would understand it. This case involved admitted contraventions, so it is a direct reminder that sale messaging remains a high-risk area under the Australian Consumer Law.

The second reading point is about accountability inside a corporate group. Businesses often assume the contracting entity alone bears the legal risk because it is the name on the invoice or website. This judgment shows that assumption can be wrong. If another group company’s employees lead the local team, steer operations, approve advertising or direct the conduct, that company may also be exposed.

At the same time, the case is not authority for saying every parent company is automatically on the hook. The Court was careful to preserve the distinction between separate legal entities. Common ownership, financing, strategic guidance and a general economic interest in the subsidiary’s success are not enough by themselves. The question is always what the evidence shows about the conduct, authority and direction behind the advertising.

For practical compliance, businesses should map the full life cycle of a campaign. Who sets the pricing? Who decides the sale period? Who drafts the copy? Who approves it? Who publishes it? Which entity employs those people? Which entity has authority to instruct them? If the answers point to more than one company, your legal risk may also extend beyond one company.

Businesses should also keep contemporaneous records. In a pricing case, that means records showing the basis for the claimed saving and the actual duration and structure of the promotion. In a group-company case, it means records showing who had authority, who gave directions, and which entity’s business activities the conduct formed part of. Those records can be decisive if the ACCC or a court later examines the campaign.

This checklist is especially relevant for fast-growing ecommerce businesses and international groups. The legal risk often appears where the formal structure and the practical reality diverge. A clean corporate chart will not help much if the evidence shows another entity’s staff were really steering the conduct.

The judgment was delivered on 16 June 2025 by Hill J in the Federal Court of Australia. The hearing took place on 26 May 2025. The judgment records that the parties had agreed statements of fact dated 14 November 2024, 26 March 2025 and 15 May 2025. The Court ordered that the matter be listed for a case management hearing, with relief to be determined in later proceedings.

That means the liability findings were made, but the final penalty and other relief were still to come after this judgment.

This page is based on the Federal Court decision in Australian Competition and Consumer Commission v Emma Sleep GmbH [2025] FCA 618. It explains the admitted Australian Consumer Law contraventions by Emma Sleep AU, the Court’s treatment of related-company liability, the operation of s 139B(2) of the Competition and Consumer Act, and the outcome that Bettzeit was liable while Emma Sleep GmbH was not.

The judgment dealt with liability and foreshadowed a later penalty proceeding. Readers should therefore treat this page as an explanation of the liability decision, not as a summary of final relief.