City Beach’s appeal against a $14 million penalty imposed last year for selling dangerous*, non-compliant button-battery products has been dismissed by the Federal Court.

The company was ordered to pay the fine at trial in December after the judge found it had sold more than 60 product types containing button batteries that failed to comply with safety standards between June 2022 and October 2024.

The case was first brought to court by the Australian Competition and Consumer Commission (ACCC), and City Beach had admitted that its conduct breached the Australian Consumer Law.

However, the retailer filed a notice of appeal earlier this year to challenge the size of the penalty. 

The Full Federal Court has dismissed the appeal, and the penalty order made last year remains in effect.

“The sale of a very dangerous but very cheap product contravening a safety standard may be a paradigm example of a circumstance where the appropriate penalty may bear no relevant relationship to the profit… because of the heightened need to deter corporations from ever selling such a product, or from failing to have systems and processes in place,” the Court ruled.

According to the ACCC, button batteries are dangerous and pose a significant risk to young children if swallowed or inserted into body parts such as the ears or nose. Ingestion can be fatal**.

City Beach’s non-compliant products included toys, digital notepads, keyrings, lights and light-up Jibbitz accessories for Crocs shoes, the regulator said, adding that these items put more than 50,000 young children at risk of severe injury or death.

“The Court has today confirmed that a significant penalty is appropriate in this case to deter City Beach and other traders from failing to comply with the mandatory button battery standards,” ACCC commissioner Luke Woodward said.

“This highlights the importance of businesses implementing systems to ensure they are complying with the button battery standards, which are intended to protect the safety of children.”

City Beach primarily offers surf and skate consumer goods, including clothing, accessories and novelty items. The retailer operates an online store and a national network of 66 retail locations.

*Data from the ACCC, the Australian Paediatric Surveillance Unit, and Kidsafe Australia shows that 20 to 30 children per week attend emergency departments across Australia for suspected button battery ingestion or insertion. At least three children have died in Australia from swallowing button batteries.

**According to The Children’s Hospital of Philadelphia, button batteries are ingested more than 3500 times per year in the US alone, “with multiple severe cases involving esophageal or airway damage and a number of deaths”. The hospital’s website reports: “When swallowed, these small batteries get stuck in the esophagus (throat). The saliva triggers an electric current, which causes a chemical reaction that can severely burn the esophagus in as little as two hours, creating an esophageal perforation, vocal cord paralysis, or even erosion into the airway (trachea), or major blood vessels.”