Businesses that make country of origin claims in marketing their products in Australia should consult the ‘Country of Origin claims and the Australian Consumer Law’ guidelines published by the Australian Competition and Consumer Commission (ACCC) in April 2014.

Recent decisions made by the ACCC in relation to country of origin claims have reinforced the importance of ensuring that businesses marketing their products in Australia are familiar with the ACCC’s country of origin guidelines.

The ACCC took action against two businesses in January 2014 for making misleading and deceptive representations for advertising solar panels manufactured in China as ‘Made in Australia’. In 2013, a supermarket chain was fined for incorrectly affixing ‘Helping Australia Grow’ labels and triangular ‘Australian Grown’ symbols to imported fruit and vegetables.

Given the ACCC’s recent activity in the area of country of origin claims, the guidelines are a useful resource for companies that make country of origin claims about their products within Australia. These guidelines are considered in further detail below.

1. Misleading and deceptive conduct

The Australian Consumer Law (ACL) requires that claims made about products be clear, accurate and not misleading. This requirement extends to claims about a product’s country of origin. It is irrelevant whether the country of origin information is voluntarily provided or whether the disclosure is required by law.

Whether a country of origin claim is misleading will be decided in the context of what an ordinary and reasonable consumer in the target audience would understand the claim to mean.

2. Safe harbour defences

The ACL provides ‘safe harbour’ defences for some country of origin claims. If goods satisfy certain criteria, the ACL deems that the business has not engaged in misleading or deceptive conduct or made a false or misleading representation, and will not attract liability under the ACL.

The defences are designed to provide businesses with some certainty about the types of country of origin claims that will not breach the ACL. The safe harbour defences do not cover all permissible country of origin claims. Businesses may make any country of origin claim about its product, as long as it is not false, misleading or deceptive. However, a business can be confident that it will not attract liability in respect of a claim if it satisfies the criteria in the ACL.

The safe harbour defences are not available for proceedings that relate to misleading the public as to the nature, quantity, characteristics, suitability for purpose or manufacturing process of any goods. Any claims made in respect of these attributes of a product would need to be substantiated without recourse to the safe harbour defences.

General safe harbour defence

The first safe harbour defence relates to general country of origin claims. The defence does not specify the terms used to indicate country of origin. It targets claims such as ‘Made in Australia’, ‘Made in China’, ‘Australian Made’ and ‘Manufactured in Australia’.

If businesses wish to rely on the general country of origin safe harbour defence, the claim made about a particular product must satisfy the following criteria:

  1. The goods must be substantially transformed in the country of origin being claimed; and
  2. Fifty per cent or more of the total costs to produce or manufacture the goods must have occurred in that country.

If both criteria are met, the business may claim that its product is made in that country, and such a claim will not attract liability under the key provisions for false, misleading or deceptive conduct.

A business cannot rely on the general safe harbour defence where the relevant representation is covered by the more specific ‘produce of’ or prescribed logo defences outlined below.

Other safe harbour defences

The other safe harbour defences are more specific.

The ‘produce of’ defence provides that a person will not be found to be engaging in false, misleading or deceptive conduct if its claim meets the following requirements:

  1. The country was the country of origin of each significant ingredient or significant component of the goods; and
  2. All, or virtually all, processes involved in the production or manufacture happened in that country.

This defence is considered more onerous than the general defence. The ACCC explains that this is because ‘produce of’ and related terms are widely regarded as ‘premium claims’ about a good’s origin, and imply a stronger meaning than ‘made in’ and other general country of origin claims. The ACCC suggests that a ‘produce of’ claim would be difficult to sustain for any good that has a significant imported ingredient or component.

The ‘grown in’ defence states that a person does not contravene the key provisions for false, misleading or deceptive conduct if the country of origin claim that goods were grown in a particular country meets the following requirements:

  1. The country referred to as the country in which the goods were grown could also be represented as the country of origin of the goods, or the country of which the goods are the produce, in accordance with the safe harbour defence requirements for such claims; and
  2. Each significant ingredient or significant component of the goods was grown in that country; and
  3. All, or virtually all, processes involved in the production or manufacture happened in that country.

The ‘ingredient/component grown in’ defence is useful for businesses that seek to promote the value of a component of their product, on the basis that it was sourced from a particular country. For a person to establish the ‘ingredient/component grown in’ defence and avoid liability under the false, misleading or deceptive conduct provisions of the ACL, a business would need to demonstrate that:

  1. The country referred to as the country in which the ingredients or components of goods were grown could also be represented as the country of origin of the goods, or the country of which the goods are the produce, in accordance with the safe harbour defence requirements for such claims; and
  2. Each ingredient or significant component that is claimed to be grown in that country was grown only in that country; and
  3. Each ingredient or significant component that is claimed to be grown in that country was processed only in that country; and
  4. Fifty per cent or more of the total weight of the goods is comprised of ingredients or components that were grown and processed only in that country.

The safe harbour defences also provide that the use of a ‘country of origin’ logo prescribed by regulations will act as a defence to liability under the ACL. The use of such a logo will signify that both substantial transformation and a certain percentage of costs of producing the goods occurred in a given country. No regulations have yet been made to prescribe any logos.

3. Other labelling issues

In addition to the safe harbour defences discussed above, there are other country of origin issues that businesses should be aware of. Some of these are discussed below.

  1. Place of origin

The safe harbour defences do not extend to ‘place of’ or ‘region of’ origin claims. Therefore, if a product is promoted as, for example, being a ‘product of  Melbourne’, the business marketing the product should assure itself that the claim is not false, misleading or deceptive.

  1. Pictorial representations

A pictorial representation, such as a logo, picture of a native animal or an iconic national symbol, may be regarded as a country of origin claim. Such images are considered to be at least as forceful and effective in marketing a product as written representations. Businesses ought to ensure that they are not misleading consumers about a product’s country of origin when making such a representation. The ACCC recommends that an attempt to qualify a pictorial representation must be sufficiently prominent to ensure that consumers do not misunderstand the country of origin information.

  1. Silence

The ACCC might find that a product’s marketing material was misleading in the absence of an explicit country of origin claim. This could arise where aspects of the labelling or packaging carry misleading implications. The guidelines highlight that the ACCC is focused on the overall impression that the information conveys.

  1. Global processing and ambiguous representations

The guidelines emphasise that, where a product’s components are processed in different countries, businesses should take care when making country of origin claims. Where appropriate, additional information should be included in marketing material and packaging to clarify ambiguous country of origin information.