Last week, the ACCC filed proceedings against two egg producers, alleging that their use of “free range” was misleading.  This litigation comes after the ACCC served substantiation notices on a number of egg suppliers in April 2013.  Eggs (and their life cycle counterpart, chickens) seem to be something close to the heart of the ACCC, which has previously pursued cases against both chicken and egg producers as far back as 1996, but seemingly more vigorously in the last 18 months.  Court action by the ACCC just before Christmas indicates that, consistent with its repeated public statements, it is taking its enforcement priorities seriously in relation to credence claims in the food industry.

The ACCC alleges that NSW-based Snowdale Holdings Pty Ltd and WA-based Pirovic Enterprises Pty Ltd made false, misleading or deceptive representations by the images and wording on their egg cartons and websites, to the effect that eggs supplied and labelled as “free range” were produced:

by hens that were farmed in conditions so that the laying hens were able to move about freely on an open range every day; and/or by hens, most of which moved about freely on an open range on most days.

However, the ACCC alleges that the Snowdale and Pirovic eggs were not all they were cracked up to be because of the:

stocking densities of the barns the hens were housed in; physical openings of the barns; conditions of the outdoor range; and/or manner in which the hens were trained in the barns.

ACCC Chairman Rod Sims has indicated that “the ACCC is not debating the merits of cage, barn or free range systems…[t]he ACCC’s concern is simply to ensure that the labelling of eggs accurately reflect the particular farming practices of the producer and the expectations of a consumer making purchasing choices based on those representations.”

The ACCC is seeking declarations, injunctions, pecuniary penalties, implementation of compliance programs, corrective notices and costs against each producer.

This action appears to be part of a continuing investigation more broadly by the ACCC into free range claims made by egg producers.

One of the reasons for the ACCC having credence claims as an enforcement priority is, as indicated by ACCC Commissioner Sarah Court, in September 2013 because “[w]e know that consumers are increasingly placing weight on premium claims – and willing to pay a premium for such goods (for example free range eggs now make up about 30% of egg sales despite their higher pricing).

Even before it was specifically listed in the ACCC’s enforcement priorities, the egg industry received focus from the ACCC:

in December 2012, the Australian Egg Corporation Limited withdrew its application for a Certification Trade Mark that proposed a number of industry standards, including standards for free range egg production, after the ACCC proposed not to approve the application; in March 2012, the ACCC commenced proceedings against Ms Rosemary Bruhn, trading as Rosie’s Free Range Eggs for conduct involving substituting cage eggs for free range eggs in supplying 109 business customers in South Australia; in 2010 the ACCC commenced proceedings against C.I & Co Pty Ltd for selling eggs labelled and supplied as “free range”, which were not free range; in 2004, the ACCC accepted a court-enforceable undertaking about the use of a tick on egg products which resembled the National Heart Foundation Tick Logo; and even as early as 1996, the ACCC instituted legal proceedings against producers of Omega 3 fatty acids enriched eggs, alleging false or misleading claims made about the health benefits of the consumption of eggs.

And whether the chicken came first or the egg (or the duck?), the poultry industry has also received ACCC focus, most notably with Federal Court proceedings issued in 2011 over ‘free to roam’ chicken claims, and in 2013 over credence claims in relation to Luv-A-Duck products, which we wrote about here.

These latest egg proceedings are set down for directions hearings for Snowdale in Perth on 23 January 2014, and for Pirovic in Sydney on 4 February 2014.  Stay tuned for our further eggs-amination of these issues.