On 23 January 2012, the Federal Court delivered yet another judgment against a business involved in misleading and deceptive advertising.
This judgment comes hot on the heels of judgments in December against Harvey Norman (fined $1.2m), Super A-Mart (orders other than fines) and the ACCC imposed fine in January against Furniture Galore ($19,800), all for misleading and deceptive advertising.
This Federal Court decision was in the case of Australian Competition and Consumer Commission v Turi Foods Pty Ltd (No 2)  FCA 19.
The ACCC commenced proceedings claiming that Turi Foods Pty Ltd (trading as La Ionica), a breeder, grower, processor and supplier of chickens, had engaged in misleading and deceptive conduct in some of its advertising material. The material included retail promotional posters and signage on the back of La Ionica delivery trucks. The posters:
- depicted chickens lounging on deck chairs; and
contained statements including:
- ‘The Good Life of a La Ionica Chicken’; and
- ‘The Facts are, chickens… are free to roam in large open sheds – NO CAGES’
- The truck signage included the following features:
- it used the terms ‘free to roam in barns’ or ‘free roaming/no cages’; and
- Did not refer to La Ionica chickens being raised or grown in sheds or barns.
Through this advertising, La Ionica made representations that its chickens are raised or grown in sheds or barns in which the chickens have at all times substantial space available to allow them to roam around freely.
In fact, the Court found that La Ionica chickens are raised or grown in a shed system in which they are subjected to such stocking densities that ‘the chickens have severe restrictions placed on their capacity to roam, if indeed, any such capacity exists’.
The Court held that the representations:
- were misleading and deceptive and likely to mislead and deceive;
- falsely represented that La Ionica chickens had a particular history; and/or
- were liable to mislead the public as to the nature and characteristics of La Ionica chickens.
La Ionica admitted to all of the contravening conduct alleged by the ACCC (except for one allegation which was not pressed) and consented to the ACCC’s proposed orders.
After the hearing on 19 December 2012, the Court made the following orders by consent:
- La Ionica cease using the advertising material containing the contravening representations;
- La Ionica be restrained for a period of three years from using the terms ‘free to roam’ and ‘free roaming’ in advertising its chickens which have been raised exclusively in a shed or barn;
- La Ionica publish a corrective advertisement in the Herald Sun;
- La Ionica pay a pecuniary penalty of $100,000 (the Court noted that but for the agreement of the parties, a higher figure might have been imposed); and
- La Ionica establish a Trade Practices Compliance and Education/Training Programme.
The remaining respondents in the proceeding, Baiada Poultry Pty Ltd and Bartter Enterprises Pty Limited (which supply chicken under the Steggles Brand) and the Australian Chicken Meat Federation Inc, are fighting the ACCC over the ‘free-to-roam’ term. The case is scheduled for a trial in March.
- Beware of misleading and deceptive advertising! The ACCC is onto it. Businesses can and are getting caught.
- Consideration must be given to the overall impression of the advertisement from the customer’s perspective and whether that impression is misleading. In this case, La Ionica asserted that it did not intend to mislead consumers in using the term ‘free to roam’, rather it intended to distinguish its practices from those of producers who raised chickens in cages. However, the overall impression given to consumers was otherwise.
If a complaint is made alleging contravention, it is important to at least consider early consent to orders if conduct is clearly misleading and also to cease any contravening conduct as soon as possible because when determining the amount of any pecuniary penalty the Court will consider factors including:
- the nature and extent of the contravening conduct;
- the deliberateness of the contravening conduct;
- the amount of loss or damage caused; and
- whether the company has shown a willingness to cooperate with the relevant authority in relation to the contravention.