The ACCC’s recent activity in relation to claims made by food producers and supermarkets puts the spotlight on credence claims which cannot be readily checked by consumers. This activity serves as a warning to ensure credence claims are accurate.
In mid-June, the ACCC commenced proceedings against Coles Supermarkets Australia Pty Limited (Coles) alleging Coles has engaged in false, misleading and deceptive conduct in the supply of bread which was partially baked and frozen off site, then transported to Coles stores, and finished in the store. These products were promoted as ‘Baked Today, Sold Today’ and/or ‘Freshly Baked In-Store’. In some stores, these products were placed nearby prominent signs stating ‘Freshly Baked’ or ‘Baked Fresh’. The ACCC has alleged that this conduct was likely to mislead consumers into thinking the bread had been baked from scratch in house on the same day as it was placed on the shelf. It has come to light that in fact some of the products were partially baked overseas.
The ACCC has also expressed concern that this conduct places competing bakeries which do bake freshly from scratch at a competitive disadvantage.
These proceedings follow successful action by the ACCC last year against Pepe’s Ducks Pty Limited, a South Australian egg supplier and Hooker Meats Pty Limited in relation to false claims about their food products.
Pepe’s Ducks agreed to pay $375,000 in civil pecuniary penalties and $25,000 in costs as a result of promoting ducks as being ‘open range’ and ‘grown nature’s way’, when the ducks were raised in barns and spent no time outdoors.
At the time, the ACCC stated that the penalty served as “a warning to businesses to make sure they are not misleading consumers into paying a premium for products that don’t match the claims made on the label”.
In addition to the penalty in that case, the Court made orders by consent restraining the company from using the phrases ‘open range’ or ‘grown nature’s way’ for a period of 3 years, and requiring the company to provide corrective notices and to implement a trade practices compliance program.
The South Australian egg producer traded as “Rosie’s Free Range Eggs” and represented the eggs as being free range when a substantial proportion were cage eggs. The Federal Court ordered the producer to pay a civil pecuniary penalty of $50,000, and also ordered corrective advertising, an injunction to restrain the producer from engaging in similar conduct in the future, and that she pay the ACCC’s costs.
Such conduct has led the South Australian Government to propose a voluntary code for egg labelling which would define the terms “free-range” or “barn-laid”, a move welcomed by many consumers and industry members.
The ACCC also brought proceedings against Victorian butcher, Hooker Meats, for misleading and deceptive conduct in falsely claiming that the meat it offered for sale was sourced from King Island. The Federal Court ordered the butcher to pay a $50,000 penalty.
The ACCC’s actions in protecting consumers from such claims has had the effect of greater awareness amongst consumers and industry bodies. Just this last week, it was reported in the press that Coles, Woolworths and florists are claiming that flowers are “freshly cut” when they are grown overseas and are placed on the shelves up to seven days after being picked, and that flower industry bodies are seeking an overhaul of flower regulation, including country of origin labelling and shelf-life expiry date.
Producers and retailers of consumer products need to be aware of this heightened scrutiny of credence claims, by the regulator and industry bodies, and be on notice that action will likely be taken for any misleading claims. Make sure that you can back up how you promote a product.