ACCC actions prove it is no sitting duck

By Andrew Goode, Mellor Olsson Lawyers.

I am sure rural producers consider labelling laws, and representations as to farm produce, matters of importance in today’s very competitive markets.

I have found it confusing working out how much Australian content there is in a product that I am buying and what, for example, the statement "Made in Australia" actually means.

The Australian Competition and Consumer Commission (ACCC) publishes a useful food labelling guide detailing what "Made in Australia", "Product of Australia" and similar descriptions actually mean.

The Guide says "Made In" means "that the product was made (not just packed) in the country claimed and at least 50 per cent of the cost to produce the product was incurred in that country. However, these products could contain ingredients from other countries."

The guide then gives an example of a jar of jam and says if it is labelled "Made in Australia" that means "the jam was made in Australia and at least half of the cost of making the jam was incurred in Australia. It doesn’t necessarily mean that the ingredients for the jam were grown or sourced in Australia".

I think 50% is a pretty low percentage if you are going to have the marketing advantage of saying your product is "Made in Australia" and it should be substantially higher. It might even persuade a few food processors to think twice about relocating their factories off shore!

In addition to explaining, and enforcing adherence to label laws, the ACCC regularly enforces existing laws designed to ensure consumers are not misled or deceived by producers in other ways.

In the recent case of Pepe’s Ducks Limited the ACCC obtained admissions and orders in the Federal Court that Pepe’s Ducks had breached the Trade Practices Act (and its replacement legislation called the Australian Consumer Law ("ACL").

According to an ACCC press release of 19 December 2012, Pepe’s Ducks is a leading supplier of duck meat products (with approximately 40% market share) and it supplied 80,000 ducks per week in Australia in 2011.

Pepe’s Ducks used phrases to describe its products such as "Open Range" on its packaging for its duck meat products and on its website from 2004 until about 2012.

From about 2007 until 2012 it used the words "Open Range" and/or "Grown Nature’s Way" on its delivery vehicles.

Pepe’s Ducks agreed to consent orders in the Federal Court whereby it acknowledged that it had made representations that the duck meat products that were sold or offered for sale would be processed from ducks that were allowed to spend at least a substantial amount of their time outdoors, that they were allowed to spend a substantial amount of their time with access to an outdoor body of water, that the ducks were allowed to spend at least a substantial amount of their time foraging for food outdoors, and their products were of a different quality to duck meat products processed from barn-raised ducks, when all the above was not the case.

As a result the Court restrained Pepe’s Ducks from using the words "Open Range" or "Grown Nature’s Way" on any packaging, signage, website, delivery vehicle or stationery or merchandise, subject to a limited exception for the supply up to 17 February 2013 to certain wholesale customers of certain pre-packaged frozen products.

Pepe’s Ducks was also ordered to implement a Trade Practices Compliance program from 1 February 2013 for a period of 3 years, and provide corrective notices to its customers and on its website and business premises.

Hefty costs were imposed on Pepe’s Ducks namely a fine of $375,000.00 and a contribution of $25,000.00 towards the ACCC’s costs of and incidental to the proceedings.

This case serves as a warning to any business supplier, whatever their industry, that they need to take care to ensure that they have properly described their product, and that they are not misleading consumers in their marketing or promotional material.

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 Details: agoode@mellorolsson.com.au or Phone: 8414 3400

Practice Area: Farm Law , Corporate, Commercial & Business

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