Australia: ACCC takes hard-boiled approach to poultry credence claims

Recent action

The Australian Competition and Consumer Commission (ACCC) was recently successful in two actions brought against processors and suppliers in the Australian poultry industry for contraventions of the Australian Consumer Law (ACL).

The first case¹ related to representations made by Baiada Poultry Pty Ltd and Bartter Enterprises that its Steggles brand chickens were "free to roam around in large barns". In fact, for a large period of their growth cycle, the chickens were raised in a shed system and kept at a stocking density level which inhibited their ability to roam around freely.

These representations, which had been published on product packaging and in print advertisements, were held to be false and Baiada and Bartter Enterprises were found to have engaged in misleading and deceptive conduct (in contravention of s 18 of the ACL), and fined $400,000.

The Australian Chicken Meat Federation Inc (ACMF) was also fined $20,000 for falsely representing on its website that all chickens raised and grown in Australia were raised and grown in large sheds where chickens could roam freely.

The Court accepted that Baiada and Bartter had adopted the "free to roam" phrasing from industry codes and public statements made by industry participants including ACMF.

The second case, brought against Luv-a-Duck,² arose from representations made on the duck meat supplier's packaging, website, brochures and promotions that its ducks were "grown and grain fed in the spacious Victorian Wimmera Wheatlands" and "range reared and grain fed". In fact, Luv-a-Duck's duck meat products had been processed from ducks that did not spend any time outside their barns. Luv-a-Duck was fined $360,000.

These cases are the most recent in a string of successful actions the ACCC has brought arising from false representations made in relation to food production methods.

Others include:

• Fining Pepe's Ducks $375,000 for misleading claims that its ducks were "open range" and "grown nature's way", when in fact its ducks were raised in barns and did not spend any time outdoors.³
• Fining a butcher $50,000 for false and misleading representations as to the source of some of its beef products.⁴
• Fining a South Australian egg supplier $50,000 for substituting free range eggs with cage eggs.⁵
• Fining Western Australian egg wholesalers $50,000 for selling cartons of eggs labelled "free range" when a substantial proportion of the eggs were not free range.⁶
• Issuing an infringement notice against a producer of olive oil for labelling its product as "extra virgin olive oil" and "100% olive oil" when in fact the composition of the product was 93% canola oil and 7% extra virgin olive oil.⁷

The ACCC has also filed proceedings in the Federal Court against two egg producers, Snowdale and Pirovic, alleging that each of the producers' use of "free range" was misleading.

Credence claims

Credence claims are one of the ACCC's enforcement and compliance priorities for 2014.

It is an offence under the ACL to make a false or misleading representation concerning the place of origin of goods, or that goods are of a particular standard, quality, grade, composition, or have had a particular history.

Premium claims about food products can be highly valued by consumers and can provide a distinct competitive advantage when marketing those products. Consumers rely upon those claims to be accurate and the ACCC will take action where consumers are being misled.

Credence claims include representations that a certain product offers a moral or social benefit. In the case of food producers and suppliers, the ACCC has focused on representations made by producers and suppliers tending to suggest that their poultry products and eggs are ethical or animal-friendly (through the use of terms such as "free range", "cage free", "barn raised").

As well as fines of up to $1.1 million per offence, companies and individuals who breach the ACL may face:

• costs orders
• corrective notices to customers, on the company website and business premises
• corrective advertising
• injunctions restraining certain conduct, and
• orders to implement compliance programs.

The ACCC can also issue infringement notices where it has reasonable grounds to believe that a person has contravened certain parts of the ACL. The recipient is required to pay a fine in order to escape further action in relation to that particular contravention.

Summary

The ACCC is continuing to focus on protecting consumers from misleading and deceptive claims relating to how food products are made, grown or produced.

The recent cases serve as a useful reminder to all business owners to give consumer issues due attention, and to avoid making false representations or promoting products in a way that may be misleading or deceptive.

Companies in the food production industry should carefully review all representations (including pictorial representations) made on their existing and future product packaging, advertising and website, and check that all claims relating to their products can be substantiated.

As illustrated by the fines imposed upon Baiada and Bartter and the AMCF, it is also important not to rely solely upon guidance from an industry body, as that guidance may itself be incorrect, and businesses may still be liable for following it.

Footnotes

¹ACCC v Turi Foods Pty Ltd (No 5) [2013] FCA 1109.
²ACCC v Luv-A-Duck Pty Ltd [2013] FCA 1136.
³ACCC v Pepe's Ducks Ltd [2013] FCA 570.
⁴ACCC v Kingisland Meatworks & Cellars Pty Ltd [2013] FCA 48.
⁵ACCC v Bruhn [2012] FCA 959.
⁶ACCC v CI & Co Pty Ltd [2010] FCA 1511.
⁷ACCC media release dated 3 June 2013, 'MOI International pays for misleading olive oil claims' < http://www.accc.gov.au/media-release/moi-international-pays-for-misleading-olive-oil-claims >.

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