Following October's article, "Counting One's Chickens? The Free Range
Debate," the poultry industry has come under the
spotlight once again with the decision of Australian
Competition and Consumer Commission v Luv-a-Duck Pty Ltd
 FCA 1136 on 1 November 2013.
Luv-a-Duck was in breach of sections 52, 53(a) and 55 of the
former Trade Practices Act 1974 and sections 18, 29(1)(a)
and 33 of the Australian Consumer Law ("ACL") by
participating in misleading or deceptive conduct.
Phrases such as "Grown and grain fed in the spacious
Victorian Wimmera Wheatlands" and using a logo with the phrase
"Range Reared & Grain Fed" formed a significant plank
of the company's marketing campaign. The court found that these
phrases were misleading or deceptive and the Company was fined a
total of $375,000 including costs.
The case is just one in a long line of food labelling cases that
have beset the poultry industry in the last 12 months. In June
2013, Australia's largest duck meat producer, Pepe's Ducks,
was fined $400,000 including legal costs for its credence claims in
the period 2004-2012.
Pepe's Ducks used phrases such as "Open Range",
"Grown Nature's Way" and a logo on its packaging of a
duck outdoors and surrounded by hills, grass and a lake. This was
found to be misleading by suggesting that the ducks spent a
substantial amount of their time outdoors, were permitted to spend
significant periods foraging for food outdoors and had substantial
access to an outdoor water supply.
The misleading statements implied that the duck meat products
offered for sale by Pepe's Ducks were of a different and
superior quality than duck meat products processed from barn-raised
The Federal Court of Australia specifically referred to
Pepe's Ducks' "sophisticated and deliberate approach
to the marketing of its duck meat products" and said
"that the Company will clearly have been aware of
increasing concern amongst consumers regarding sources of food and
the treatment of animals used to produce food products"
and that the marketing claim was likely to have led to a
substantial increase in the market share of Pepe's Ducks at the
expense of law-abiding competitors.
With 40% of the Australian duck meat market (around 80,000 ducks
sold each week), the potential impact of this false marketing
campaign is significant.
The history of credence claims in the poultry industry over the
last 12 months begs the question whether harsher penalties are
needed to deter such behaviour, not only by the culprits but by
other industry players.
Section 224(3) of the ACL permits a $1.1 million maximum penalty
for each act or omission that constitutes misleading or deceptive
conduct by a body corporate.
The Federal Court did not set out to determine exactly how many
breaches occurred in either case, but rather imposed an overall
fine. The fines imposed on Luv-A-Duck and Pepe's Ducks were
considered moderate but within the acceptable range.
Bromberg J, in the Pepe's Ducks case, considered that the
combination of (1) a fine together with (2) the company's
requirement to implement an ACL compliance programme and (3)
publish mandatory notices on their website put the smaller fine in
context and within an acceptable range of penalties.
The free-range debate is not new in Australia and these recent
cases illustrate not only the importance to consumers of animal
welfare but also the temptation on the part of primary producers to
manipulate that concern from a marketing perspective and the
potential for abuse. The ACCC clearly recognises this risk and is
taking it seriously.
With consumers calling for a complete overhaul of food-labelling
laws, it is anyone's guess which direction the debate will
take. What remains to be seen is whether a total overhaul of
current legislation in relation to food product labelling is really
necessary or whether a strict implementation of the current
provisions is sufficient for the consumer law watchdog to eradicate
the breaches that so offend the public interest.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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