Australian Competition and Consumer Commission v Emma Sleep GmbH (Penalty) [2026] FCA 493

In Australian Competition and Consumer Commission v Emma Sleep GmbH (Penalty) [2026] FCA 493, the Federal Court fixed penalties for misleading discount and limited-time sale advertising used to sell bedroom products to Australian consumers. The Court imposed total pecuniary penalties of $15 million, split equally between Emma Sleep Southeast Asia Inc and Emma Sleep Pty Ltd.

This was a penalty judgment, not the original liability ruling. The Court had already declared contraventions of the Australian Consumer Law, and this decision dealt with the amount of penalty and agreed relief such as injunctions, a compliance program and corrective notices.

Emma Sleep sold mattresses, bed frames, pillows and accessories to Australian consumers, mainly online. The Australian company, Emma Sleep Pty Ltd, advertised through its own website and social channels, by email, on third-party retailer websites, and through offline channels including television, radio, text messages and billboards. A review site called Top 5 Best Mattress was also part of the advertising picture. The judgment records that this site was registered to Emma Sleep Pty Ltd and operated by another group subsidiary together with staff in Country Team Australia.

The business structure mattered. Country Team Australia was responsible for Emma Sleep AU's operations in Australia and for managing content on online platforms. The agreed facts recorded that leadership roles were spread across Emma Sleep AU and Emma Sleep SEA, that the people steering Australian operations included staff employed by Emma Sleep SEA, and that the German parent, Emma Sleep GmbH, generally provided strategy-level guidance. There was also a management and administrative service agreement under which the parent was appointed to provide specified management services, including advice and assistance in marketing and administration, although that agreement was later terminated with retroactive effect.

The ACCC challenged two recurring forms of advertising. First were savings representations. Products were shown with a purchase price and a higher strike-through price, or with statements such as '50% OFF', 'GET UP TO 55% OFF', '55% SAVINGS', '-50%' or 'Save as much as $3,531'. Secondly, there were limited-time sale representations. Sales campaigns commonly featured countdown timers and text such as 'Last chance to get up to 55% off' or 'Ending Soon! Until 3rd of July only'.

The agreed facts recorded that, for 58 products, discount statements were always used during the relevant period even though those products had not previously been offered for sale at the strike-through price or equivalent undiscounted price. For another 15 products, there were periods with and without discount statements, but the overwhelming majority of sales still occurred while discount claims were being used. The agreed facts also recorded that the supposedly time-limited campaigns were not truly limited because timers reset and/or the same or similar discounts continued after the campaign ended.

This judgment did not revisit whether the conduct was misleading in the first place. Justice Hill made clear that the proceeding was to determine the penalty to be imposed on Emma Sleep SEA and Emma Sleep AU for contraventions of ss 18 and 29(1)(i) of the ACL, and that the single issue to be determined was the amount of pecuniary penalty. Emma Sleep AU had admitted the contraventions. In the earlier liability stage, the Court found that Emma Sleep SEA also contravened the ACL, both as a principal contravener and through the operation of s 139B(2)(b) of the Competition and Consumer Act.

The parties had already submitted proposed orders on other relief. Those included an agreed form of injunction, a compliance program and a corrective notice. Costs were deferred. So the real contest in this judgment was the size of the penalty. The ACCC argued for penalties totalling $36 million, with $18 million against each liable respondent. The respondents argued that a total penalty of $2 million was appropriate.

That meant the Court had to assess the seriousness and scale of the conduct, the extent of consumer exposure, the loss or damage and benefit associated with the conduct, the circumstances in which it occurred, the financial position of the liable entities, and the level of deterrence required. The catchwords also show that the Court considered whether the conduct involved deliberate courting of the risk of contravention, how to determine loss to consumers and benefit to the respondents, and whether the financial position of the immediate parent company was relevant when fixing penalty against the liable entities.

The legal issue was what pecuniary penalty was appropriate under s 224 of the ACL for false or misleading price representations under s 29(1)(i), after liability had already been established. Section 224 required the Court to have regard to all relevant matters, including the nature and extent of the conduct, any loss or damage, the circumstances in which the conduct took place, and other penalty factors. The extract also shows that the Court considered the respondents' financial position and the role of deterrence.

For business readers, the important point is that penalty in consumer law cases is not calculated by looking only at one ad or one customer complaint. The Court looked at repeated conduct over nearly three years, across many products and many channels, with very large consumer reach. The agreed facts included over 170,000 sales of 58 always-discounted products worth about $74.1 million, and more than 73,000 sales of another 15 products worth about $60.37 million. The Court also had evidence of millions of website visits, emails and direct messages. That scale matters because it goes directly to seriousness and deterrence.

The judgment also shows that admissions and cooperation do not end the penalty analysis. Even where one respondent admitted contraventions and the parties agreed on some forms of relief, the Court still had to decide what penalty was appropriate in light of the conduct as a whole. Businesses should read this as a reminder that once misleading pricing conduct is established, the financial consequences can be substantial even before legal costs, remediation work and reputational damage are counted.

Justice Hill imposed total pecuniary penalties of $15 million. Emma Sleep Southeast Asia Inc was ordered to pay $7.5 million and Emma Sleep Pty Ltd was ordered to pay $7.5 million, each within 30 days. The Court also ordered that no interest was payable on those penalties during the 30-day payment period.

The non-penalty orders are just as important for businesses. For three years, the second and third respondents were restrained from advertising products on the Emma Sleep website, the Top 5 Best Mattress website, Australian Facebook and Instagram pages, and offline channels including television, radio, emails and text messages with a strike-through price, percentage discount or savings discount if the product had not been offered for sale or sold, or had almost never been offered for sale or sold, at that higher or equivalent price.

The Court also restrained them for three years from advertising a sales campaign with a countdown timer or text representing that the campaign was ending soon when the campaign was not truly limited in time because the timer reset before the campaign concluded and/or the products continued to be advertised afterwards at the same or similar discount.

In addition, the Court ordered the respondents to establish, implement and comply with an ACL compliance program within 90 days, and to maintain it for three years. That program had to be designed to minimise the risk of future contraventions of Part 2-1 and Part 3-1 of the ACL, particularly ss 18 and 29, and had to include training for employees or other persons in the business who deal or may deal with consumers in Australia.

The Court also ordered corrective notices to be published on the Emma Sleep website homepage, the Top 5 Best Mattress homepage, and Emma Sleep's Australian Facebook and Instagram pages within 90 days, and maintained for at least 90 days. Affidavits verifying compliance with the compliance-program and corrective-notice orders also had to be served. Costs on liability and relief were reserved.

The first lesson is that discount advertising needs a real commercial foundation. A strike-through price is not just a design element. It communicates that the product was genuinely available at the higher price and that the customer is receiving a real saving against that benchmark. If your systems generate reference prices automatically, or your team routinely applies percentage-off labels to products, you need to know exactly what those figures represent and whether they reflect actual offers or sales history.

The second lesson is that urgency claims are substantive representations, not harmless sales language. A countdown timer or 'ending soon' statement can materially influence a consumer's decision to buy now rather than wait, compare or walk away. If the timer resets or the same discount continues after the deadline, the urgency message may be false. This is especially relevant for ecommerce businesses using plugins, templates or agency-built campaign tools that recycle sale periods by default.

The third lesson is about group structures. The judgment records a business model in which Australian operations, offshore staff, strategy-level guidance from the parent, and shared service arrangements all formed part of the operating picture. The penalty was imposed on both the Australian company and an offshore group company. If your business uses a parent company, offshore growth team, regional marketing hub or shared services arrangement, you should be clear about who develops campaigns, who approves pricing logic, who controls website content and who owns ACL compliance for Australian consumers.

The fourth lesson is operational. The Court's orders effectively describe the controls a business may be forced to adopt after litigation: training, compliance systems, corrective notices, and restrictions on future advertising conduct. It is usually far cheaper to build those controls before a regulator becomes involved.

The judgment is also a reminder that courts look beyond front-end advertising copy to the business arrangements behind it. The agreed facts covered the respondents' corporate relationships, the role of Country Team Australia, the employment positions of key leaders, the parent company's strategy-level guidance, management services arrangements, and financial assistance provided to the Australian company. In other words, the Court was not looking only at what appeared on a webpage. It was looking at who was involved in creating, steering and supporting the conduct.

For businesses, that means compliance should not sit only with the person writing ad copy. Pricing claims often depend on product setup, ecommerce systems, campaign scheduling, approval workflows, and group reporting lines. If those functions are split across entities or countries, document the process clearly. Decide who checks pricing history, who approves sale periods, who can activate or reset timers, and who keeps the records. If a regulator asks questions later, those documents and workflows may matter as much as the advertisement itself.

The relevant conduct ran from 15 June 2020 to 27 March 2023. The earlier liability judgment was delivered on 8 August 2025, when the Court declared the contraventions referred to in the penalty orders. The penalty hearing took place on 1 and 2 April 2026, and the penalty judgment and orders were delivered on 24 April 2026.

As at this decision, the Court had fixed penalty and made injunction, compliance and corrective-notice orders. Costs on liability and relief were reserved.