Food for thought: Lessons for business from the ACCC’s spotlight on food labelling and production

“Ethical” and “free-range” are two marketing buzzwords the ACCC scrutinises closely.

As consumers increasingly seek out local food producers who utilise high quality, ethical and sustainable production methods, the Australian Competition and Consumer Commission has responded by increasing its focus on companies in the food production and manufacturing industry.

Several cases in 2014 found that companies had misrepresented the origins of their products, the types of products used and the methods of farming. 

Further demonstrating its focus, in February the ACCC launched its 2014 Compliance and Enforcement Policy. 

As part of that policy, the ACCC announced that one of its areas of priority would be “credence claims, particularly those with the potential to adversely impact the competitive process and small businesses.”

This article looks at some of the highest profile cases from 2014 and sets out some lessons that can be learnt from the year that was.

Origin of products

There are three recent cases involving ACCC action for misleading conduct in relation to the origin of products.

In August 2014, Maggie Beer Products gave a court enforceable undertaking acknowledging that certain place of origin representations on the labelling of “Maggie Beer” products was likely to mislead consumers. The labelling on certain items in the Maggie Beer Products range contained the words: “A Barossa Food Tradition” in close proximity to “Made in Australia” and “Maggie Beer Products: … Tanunda, South Australia”. The ACCC considered that the effect of these statements was to convey the impression that the products were manufactured in the Barossa Valley and/or South Australia when in fact the products were manufactured elsewhere in Australia.

In June 2014, Basfoods received hefty penalties totalling $30,600 and gave a court enforceable undertaking, after receiving infringement notices from the ACCC in respect of its “Victoria Honey” product. The ACCC considered that labelling the product “Victoria Honey” misrepresented the product as being produced in Victoria, when in fact it was made in Turkey. Product labelling and representations on the website also implied that “Victoria Honey” was made by honey bees when in fact it was mainly comprised of plant sugars. 

Finally, in December 2014, Hume Import & Export (trading as Bera Foods) also received a penalty of $10,200 for including the word “honey” and a map of Australia on its “Hi Honey” product. The ACCC considered that this represented the product was honey made in Australia when in fact the product was largely made up of plant sugars and made in Turkey. 

Lessons learned:

1. There is danger in representing that products are made in one part of Australia when in fact they are made elsewhere. This is particularly risky if, in making the representation, the producer is seeking to benefit from the reputation of a certain region or by implying that the products are produced locally.
2. Even if the ingredients and/or the country or place of origin of a product is included in fine print, product names, marketing information and slogans can still amount to misleading and deceptive conduct if the representations send a message which is contrary to the true origin of the product.
3. The ACCC is cracking down on identifying a synthetic product by a name that implies it is a natural product. Honey is a current focus but other products may also be targeted.

Premium animal products and “free-range” claims

In June 2014, Barossa Farm Produce gave a court enforceable undertaking in respect of misleading and deceptive representations made about its “The Black-Pig” smallgoods range.  The representations were that The Black Pig smallgoods range was made from heritage Berkshire pigs or other heritage black pig breeds (which are premium products) and/or free range pigs, when this was not the case. Barossa Farm Produce acknowledged that it did not have adequate systems in place to verify the breed or type of pig used in The Black Pig smallgoods.

In September 2014, the Federal Court of Australia ordered Pirovic Enterprises, an Australian egg producer, to pay $300,000 after the court found Pirovic had engaged in misleading and deceptive conduct by marketing its eggs as “free range”. The court made this finding despite Pirovic’s labelling practices having been compliance tested by the Australian Egg Corporation and the free range egg farms in question having a “Level A” accreditation for free range egg production under the Egg Corporation Assured National Egg Quality Assurance Program Trade Mark Certification Scheme. The court found that the eggs were not farmed in such a way that the hens could and did in fact move about freely on an open range on most days.

Lessons learned:

1. Animal welfare is a hot topic in food marketing. Consumers are generally willing to pay more for ethically raised meat, therefore any representations that animals are raised ethically are likely to be closely scrutinised by the ACCC.
2. Industry body certifications and standards may not be sufficient to render a product “free range” or “ethical” and the court will look behind these to the actual living conditions of the animals.
3. Producers should be aware that any representations regarding the breed or type of animal should be backed up by systems to ensure that other types of animal are not used in making the product. 

Tanya Jackson is a senior associate and Alexandra Ottens is a lawyer at law firm Holding Redlich.