The Australian Competition and Consumer Commission (ACCC) has recently pursued a number of businesses over misleading information regarding the origin of goods available for sale in Australian stores.
Understanding the need to correctly label products is important for businesses operating in Australia, as Australians have proven a willingness to pay a premium for products that are home grown, made or owned.
Last December, the ACCC instituted proceedings against Darling Downs Fresh Eggs in the Federal Court, alleging contraventions of the Australian Consumer Law (ACL). Specifically, the ACCC argued that Queensland-based Darling Downs Fresh Eggs marketed eggs as “free range,” when in fact the laying hens were confined to barns, and had never seen the light of day. NSW-based Derodi and Holland Farms have also come under fire for similar allegations regarding their EcoEggs, Field Fresh and Port Stephens brands.
In December 2013, the ACCC brought proceedings against egg farmers Snowdale in WA and Pirovic in NSW. The companies were accused of misleading labelling, claiming “free range” eggs, where the conditions of the barns indicated that such a claim was unlikely to be substantiated. Pirovic was ultimately fined $300,000.00 for its actions.
As reported here previously by Pod Legal, “Victoria Honey” producer Basfoods admitted to misleading consumers as to the origins of its products, and paid $30,600 in penalties. It’s Australian honey was in fact made from corn and cane sugars in Turkey. Similarly, Berra Foods, the producer of “Hi Honey,” was also subject to legal action, and made to pay $10,200 for deceptively labelling Turkish plant sugars as Australian made honey.
The relevant law
The law on misleading conduct requires that suppliers or sellers of products must not intentionally or unintentionally mislead consumers, or lead consumers to be reasonably misled. This includes information regarding the country of origin of goods, and applies to all stages in the supply chain, including place of manufacture, place of growth, and source of contents.
In Australia and New Zealand, businesses are required to disclose the origin of goods in rules such as the Australia New Zealand Food Standards Code, among others. Often, businesses will volunteer this information if they consider it may provide a competitive advantage.
Penalties that apply for breaching the ACL are wide-ranging, and include declarations, fines, injunctions, and other orders such as compliance programs and publication orders.
To avoid confusion, the ACCC has provided some helpful general principles to consider when listing the origin of goods:
- Companies can make any origin claim provided that it is not false or misleading;
- More complex origins may require more detailed labelling;
- Companies must be able to substantiate claims regarding origin and conditions in which products were produced; and
- Pictorial representations may also be assessed as a claim as to origin. This includes the use of logos, pictures, iconic animals or iconic symbol.
Defences may apply to country of origin claims. More information is available on the ACCC website here.
Complying with the law
Ultimately, the question to ask is “would the ordinary consumer be misled by the stated origin on the label?” To avoid breaches of the ACL, it is important for businesses to ensure that their labels can be taken at face value, or that they can readily substantiate any claims.