In an era of heightened awareness regarding health and obesity, consumers are taking a much greater interest in the foods they eat. Health concerns have led to increased scrutiny of ingredients on product labels and a newfound skepticism regarding manufacturers’ claims about their food products. Consumers are demanding truth and transparency, and they are prepared to take action if a manufacturer misrepresents that a product is “natural? or “sugar-free? when it is not - or that the product does or does not contain certain ingredients.
Not surprisingly, these issues have attracted the attention of plaintiffs’ class action lawyers. After all, food is big business, and a hospitable class action environment on consumer protection issues makes food and beverage manufacturers a likely target. In fact, food and beverage manufacturers in the United States have seen a surge in product liability claims and class actions. If past experience in other industry sectors serves as a reliable guide, copycat claims will follow in Canada for foods that are marketed both north and south of the border.
In light of increased consumer awareness, the Canadian Food Inspection Agency (CFIA) recently released a set of interim Guidelines for Highlighted Ingredients and Flavours (the Guidelines).1 Highlighted ingredients are commonly used by manufacturers to promote positive or desirable features of a product on its label, whether in words or through pictures.
While the Food and Drugs Act (FDA)2 and the Consumer Packaging and Labelling Act (the CPLA)3 have regulated aspects of food product labelling for decades, the CFIA Guidelines aim to help industry meet labelling requirements and interpret prohibitions on false, misleading and deceptive representations in the current regulatory environment. Ultimately, the Guidelines seek to give consumers meaningful information about the food they purchase.
In particular, the Guidelines address false, misleading or deceptive representations in product labelling with respect to “highlighted” ingredients in food, such as touting that a product is “made with real fruit” as compared to being “fruit flavoured.” The Guidelines address ways to avoid misleading impressions in product labelling scenarios such as the following:
- substituting an imitation ingredient for a highlighted ingredient, when the label (either through pictures or words) implies that the product contains the highlighted ingredient;
- over-emphasizing the presence of a highlighted ingredient in a product containing like or similar ingredients, such as prominently displaying “brown sugar” when the product also contains a similar ingredient, like sucralose; and
- adding artificial flavours (i.e., grape flavours) when the label creates the impression that the highlighted ingredient was added (i.e., actual grapes) or that there is more of the highlighted ingredient in the food than is actually the case.
The Guidelines suggest including the following types of information to avoid misleading impressions:
- prominent and descriptive common names (i.e., orange juice from concentrate, vanilla cookies or milk chocolate);
- percentage declarations that indicate the proportion of the highlighted ingredient in the food; and
- statements indicating the presence of similar ingredients or additions for the purpose of flavouring.
The Guidelines also advise on
- the way information regarding the attributes of food should be presented, based on threshold levels of imitation ingredients, similar ingredients and flavours; and
- a methodology for including percentage declarations on product labels.
The Guidelines represent the culmination of a decade-long process involving three stakeholder consultations, bi-lateral meetings, research, and surveys to gauge public opinion. The CFIA has stated that the interim Guidelines will be finalized in view of online comments received during a comment period that closed on August 23, 2012. In the interim, industry is required to comply with the Guidelines.
Penalties are steep for false or misleading representations contrary to the FDA and the CPLA, including fines of up to $250,000 and even potential prison time in serious cases.4 However, a defence of due diligence is available to a person or company accused of contravening these provisions.5 Manufacturers can mitigate risk by establishing systems and best practices to ensure compliance with these provisions, using the information in the Guidelines.
Due diligence can help companies defend charges brought under these sections, and compliance with industry standards can help in the defence of civil claims. Conversely, the absence of due diligence can complicate the defence of such cases.
The Guidelines are only one piece of an increasingly strict regulatory puzzle. On November 22, 2012, the federal Safe Food for Canadians Act (SFCA)6 received royal assent. Similar to the FDA and the CPLA, the SFCA contains a general prohibition against misleading or deceptive representations, which should be interpreted in conjunction with specific requirements in the Guidelines. Like the FDA, the SFCA focuses on whether a representation is likely to create an erroneous impression regarding a product’s character, value, quantity, composition, merit or safety.7 However, the SFCA also amalgamates provisions contained in the CPLA that prohibit representations likely to create an erroneous impression regarding a product’s quality, origin and the method of its manufacture or preparation.8
When in force, the SFCA will combine heightened powers of inspection and enforcement with significantly higher maximum fines and penalties,9 as well as exposing directors and officers to potential conviction if they direct, authorize, assent, acquiesce or participate in the commission of an offence.10 Once the provisions of the SFCA come into force, food and beverage manufacturers face increased exposure if products are advertised or labelled in a false, misleading or deceptive manner..