Mercedes-Benz has been ordered to pay a $12.5 million penalty for failing to use attention-grabbing and high-impact language when telling customers about the recall of potentially deadly Takata airbags.

The company has admitted it breached consumer law by failing to abide by a mandatory recall notice issued by the federal government in 2018.

Australian Competition and Consumer Commission deputy chair Delia Rickard said it was the first time a business had been penalised for breaching such an order.

Between 2018 and 2020 a total of 23 Mercedes-Benz customers were told the recall was a precaution, according to a Federal Court ruling delivered on Friday.

Four customers were effectively told in 2020 the airbags in other manufacturers’ vehicles had not had any faults or caused any accidents, injuries or deaths.

Defective Takata airbags have been associated with about 33 deaths, including one in Australia, and more than 350 injuries globally.

“We believe the statements made by Mercedes-Benz staff had the potential to give the impression to consumers that the airbag replacement was less urgent than was warranted by the real risks posed,” Ms Rickard said.

Suppliers were required to recall and replace defective airbags by December 31, 2020, and develop and implement a plan to communicate with consumers to maximise airbag replacement.

“Given the risks … increased over time, we were concerned about the risks of any potential for delay in having these faulty airbags replaced,” Ms Rickard said.

The ACCC described the Takata recall as the most significant recall ever in Australia, affecting four million airbags in some three million vehicles.

The Federal Court ordered Mercedes-Benz to pay the penalty within 30 days, as well as $100,000 towards costs incurred by the ACCC.

The ACCC says manufacturers had successfully recalled 99.9 per cent of vehicles with faulty Takata airbags by July 2021.

– AAP