14 August 2020
What you need to know
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The Australian Competition & Consumer Commission (ACCC) has confirmed that it is unlikely to take enforcement action against businesses that are taking genuine and reasonable steps to comply with labelling requirements.
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Food regulators in Australian and New Zealand have also released a form to be completed if global supply issues affect the ability of a business to comply with the Australia New Zealand Food Standards Code's (the Food Standards Code) labelling, composition and packaging requirements.
What you need to do
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If COVID-19 has impacted your supply chain or manufacturing processes, it is important to consider whether your food labels are correct and take reasonable steps to correct any claims that become incorrect.
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If a supply chain disruption has affected your ability to comply with the Food Standards Code, consider writing to the relevant food regulator to seek a period of relief for non-compliance.
Panic buying during the COVID-19 pandemic has resulted in a rapid increase in consumer demand for staple food items. At the same time, there have been disruptions in food supply chains. As a result, there have been significant sourcing challenges for food manufacturers including a need to find short-term alternative suppliers of raw materials or ingredients. This has led to food manufacturers adjusting the quantities or source of their ingredients.
But what does this mean for the accuracy of product packaging and compliance with the Food Standards Code?
Compliance with country of origin labelling requirements
Manufacturers often include country of origin claims on their packaging. For example, a product label may say "Made in Australia from at least 70% Australian ingredients". However, if there is a shortage in those Australian ingredients and the manufacturer has had to source alternative ingredients from overseas, the manufacturer will need to take steps to correct the claims on their product labels.
The ACCC's guidance on country of labelling requirements states that:
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the ACCC takes a proportionate approach in considering any compliance or enforcement action in relation to country of origin labelling; and
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the ACCC is unlikely to take enforcement action where a business has made genuine and reasonable efforts to comply with the country of origin labelling requirements and to ensure consumers are informed about any changes to its country of origin claims.
What steps are likely to be sufficient to avoid enforcement action?
As most product packaging is bulk printed in advance, changing product labels to reflect short term supply changes is likely to be expensive and difficult.
The ACCC has suggested that reasonable steps to correct country of origin claims could include:
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corrective stickers on packaging to cover the incorrect country of origin claim; and/or
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corrective material provided at the point of sale.
Whether such steps are sufficient will depend on how clearly they convey to the consumer the true nature of the country of origin of the ingredients or product.
Compliance with the Food Standards Code
COVID-19's disruptions to food supply chains may also lead to challenges with ensuring that product composition, labelling, and packaging complies with the Food Standards Code.
In recognition of COVID-19's impact, Australian and New Zealand food regulators have published a form for businesses to use to request relief from compliance with the Food Standards Code from their local food regulator.
What kind of information do I need to provide the food regulator?
The form requires businesses to provide their local food regulator with detailed information about the nature of their compliance issue, including:
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what product(s) are implicated;
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if the issue concerns formulation changes or labelling, a copy of the proposed communication with consumers about the change;
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if the issue relates to a change of ingredients, the assessment undertaken by the business to determine any safety issues or cross contamination from undeclared allergens;
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whether the proposed change will significantly affect characteristics such as water activity or pH, introduce pathogens or allow microbial growth; or
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whether the proposed change will result in any unacceptable chemical hazards.
The form notes that the standard timeframe for relief is 6 months and any requests for longer timeframes will need to be justified. A copy of the form is available on the Food Standards Code's website.
Conclusion
It appears that the regulators are taking a practical and reasonable approach to compliance with product labelling, composition and packaging requirements during the pandemic. However, it is essential that businesses are proactive in considering the claims that their packaging and advertising makes and correcting those claims where changes to the supply chain render those claims inaccurate or misleading. Further, businesses should consider whether there has been any impact on their compliance with the Food Standards Code and, if so, apply for short term relief.
For further information, please contact:
Nina Fitzgerald, Partner, Ashurst
nina.fitzgerald@ashurst.com
