Direct selling organisations (DSOs) now have a useful overview of the issues to be aware of under the Australian Consumer Law (ACL) when making claims about the country or place of origin of a product, with the ACCC’s release of a new guideline in April 2014 Country of origin claims and the Australian Consumer Law. The guideline discusses when the “safe harbour” defences for country of origin claims can be relied upon and provides numerous illustrations of when products may or may not satisfy ACL requirements.
We recommend the guideline be reviewed by any business making country of origin or place of origin claims about their products. Legal advice can be sought for any specific issues you encounter.
Recent ACCC action in this space
The guideline is a timely reminder for DSOs of their obligations given the ACCC’s focus on credence claims, particularly in the food industry. Recent actions include:
- 17 January 2014 - the Federal Court ordered two companies supplying solar panels to pay a combined penalty of $125,000 for making false or misleading representations that the solar panels they supplied were made in Australia when they were made in China, as well as for publishing fake testimonials. Other orders were also made including that the sole director pay a $20,000 penalty.
- 27 June 2013 - Coles Supermarkets Australia Pty Ltd paid six infringement notices totalling $61,200 for alleged misleading representations about the country of origin of fresh produce in its stores. It had displayed imported oranges, kiwi fruit, asparagus and almonds under signage stating “Helping Australia Grow” and containing the triangular “Australian Grown” symbol. The ACCC considered that the correct identification of the origin elsewhere on or near the products was not sufficient to correct the overall misleading impression.
- 5 February 2013 – the Federal Court ordered a $50,000 penalty against a Victorian butcher, Kingsland Meatworks & Cellars Pty Ltd, for making false or misleading representations that the meat it sold was from King Island, when in fact very little or none of the meat was from King Island. Other orders were also made including against the director of the company.
- 3 October 2012 - the Federal Court ordered a Gold Coast retailer to pay $55,000 in penalties after it admitted it made false or misleading claims that sheepskin and wool bedding products were made in Australia (attaching the official “Australian Made” logo to sheepskin products), contained 100% sheep wool or contained 100% alpaca wool, when these were not true. Other orders were also made including against the director of the company.
The Country of Origin claims and the Australian Consumer Law guideline
Whilst the ACCC has released country of origin guidance in the past, and the law in the area is not new, the new guideline provides a useful up to date look at the area. The guideline applies generally to consumer goods and not just to a particular industry.
It covers when a “safe harbour” defence under s255 of the ACL may be relied upon (which deems a business not to have engaged in false or misleading conduct or to have made such a representation) for:
- “made in” claims (providing useful examples of when substantial transformation of a good may occur in a country and discussing how the cost of production/manufacture requirement is met)
- “produce of” or “product of” claims
- “grown in” claims
- claims that an ingredient or component of goods was grown in a particular country
- claims involving the use of a prescribed logo
The guideline also addresses obligations under the ACL when:
- making a place of origin claim (i.e., a claim specifying that goods originate from a more local region as opposed to a country)
- including additional information about the origin of a product or components of it
- remaining silent about the origin of the goods when the packaging may carry misleading implications
- making claims that could be ambiguous, such as “made in Australia from local and imported ingredients”, to ensure the claim is not misleading
- using pictorial representations which may be interpreted as a country of origin claim
- qualifying other statements on a product
- the integration of the Australian economy with the global economy results in difficulty assigning an origin to the goods
The guideline gives insight into the ACCC’s view of various misleading and deceptive practices. It also discusses good risk management practices, such as ensuring claims can be substantiated, as well as safeguards to reduce the risk of breach, such as compliance training, reviewing promotional materials, sign-off procedures and complaints handling processes.