3 November, 2017
What you need to know
The ACCC has continued its focus on false and misleading claims by food manufacturers and retailers and over the last 12 months has taken action against a number of suppliers. Five recent cases are discussed below.
What you need to do
Ensure that all claims regarding a product's standards or attributes can be substantiated and are accurate, including those relating to the healthiness of the product.
Ensure that any disclaimers are displayed prominently on a product's packaging and in advertising materials.
Ensure that the particular provisions of the Australian Consumer Law (ACL) relating to marketing practices are always adhered to, particularly sections 18 and 29 regarding misleading and deceptive conduct and false or misleading representations.
Don't assume consumers possess a healthy dose of scepticism
The ACCC issued infringement notices to Unilever Australia and The Smith's Snackfood Company relating to misleading representations made about the healthiness of their snack foods.
Unilever's packaging for its Rainbow Paddle Pops included a logo with the words “School Canteen Approved” with a tick symbol. Smith's packaging for its Sakata Paws Pizza Supreme Rice Snacks included a logo with the words “Meets School Canteen Guidelines” with an image of a sandwich and apple.
The ACCC considered that:
- Unilever and Smith's were using their logos to falsely represent that the products were a healthy option for school canteens to supply to children; and
- the disclaimer on the packaging of both products that they only met the 'Amber' criteria of the National Healthy School Canteens Guidelines was not featured prominently enough to correct the misleading representations created by the logos.
Unilever Australia and The Smith's Snackfood Company each paid penalties of $10,800.
No free rein to label "free range"
The Federal Court has imposed its highest penalty to date for misleading claims about "free range" eggs in ordering Snowdale Holdings pay $750,000 for contravening the ACL. Snowdale was also ordered to pay $300,000 for the ACCC's costs.
The Federal Court found that the hens that laid Snowdale's eggs did not move around freely on an open range on most days, and therefore the representation that they were "free range" was false. In reaching this conclusion, the Court had regard to:
- the number of openings in the side walls of the sheds (called "pop holes") to give the hens access to the outdoors;
- the number of birds per metre of pop hole; and
- the size of the flock and the size of the sheds.
The parties had initially jointly proposed a penalty of $500,000, which Justice Siopis considered was too low. The parties eventually agreed on a penalty figure of $750,000, which was influenced by the loss to consumers who had paid a premium for the "free range" eggs, and the resultant gain of at least $1.7m for Snowdale.
A national information standard was issued in April this year, which sets out a number of requirements for "free range" eggs.
In Heinz-sight, it's best not to sugar coat things
The ACCC commenced proceedings in the Federal Court against Heinz Australia in relation to its Little Kids Shredz products.
The Shredz products' packaging includes the statement "99% fruit and veg" and prominently displays pictures of fresh fruit and vegetables.
The ACCC claims that the packaging leads consumers to believe that the products are of equivalent nutritional value to fruit and vegetables and are a healthy and nutritious food for children aged one to three years, when this is not the case. The ACCC claims that the Shredz products use fruit paste or puree and contain over 60 per cent sugar, which is significantly higher than the sugar in natural fruit and vegetables.
The ACCC sought declarations, injunctions, pecuniary penalties, corrective notices and costs. The case was heard from 24-28 July 2017 and the judgment is pending.
Orega-no basis for representation as products fail to parsley test
The ACCC is investigating allegedly misleading representations about the composition of certain "oregano" products. Testing of 12 popular oregano products found that seven contained substantial amounts of olive leaves, with two also containing sumac leaves. The ACCC considers that where a product is labelled "oregano", consumers are led to believe that it contains only oregano.
The ACCC has accepted court enforceable undertakings from ALDI Foods, Menora Foods and Spencers Gourmet Trading to undergo annual testing of their oregano products and other herbs and spices. The packaging for ALDI's oregano product in particular goes so far as to say "Ingredients: Oregano (100%)".
The ACCC has also agreed to administrative resolutions with four smaller suppliers, who have agreed to temporarily cease selling their oregano products and take steps to ensure their future products do not mislead. The ACCC is continuing its investigations into other oregano products.
(Not so) EasyMeals called out for misrepresentations
Online food retailer EasyMeals has admitted to contravening the ACL, following an investigation by the ACCC into the marketing of its products. In the course of making unsolicited phone calls to potential customers, EasyMeals:
- represented that its products were suitable for all diabetic patients, when the suitability depends on the individual, their diet and the severity of their condition;
- represented that the customer would receive a free meal by providing their contact details, when in fact they were required to purchase an EasyMeals meal first; and
- failed to provide the information required by the unsolicited consumer agreement provisions of the ACL.
The ACCC has accepted court enforceable undertakings from EasyMeals to not engage in similar conduct for three years, implement a ACL compliance program, and display a corrective notice on its website for 60 days.
For further information please contact:
Joanna Lawrence, Ashurst
joanna.lawrence@ashurst.com
