In brief — ACCC prosecutes egg producers for bogus free range claim
Many people choose to pay more for products labelled “free-range” because they believe that the animals used in their production were treated in a more humane way. However, the ACCC’s recent successful prosecution of egg producers demonstrates that such labelling can be misleading.
Free range products and ethical preferences
Consumers are increasingly likely to consider farming systems when making decisions about purchasing animal products. The growing display of “free range” products in supermarkets reflects the desire of food producers to cater for consumers’ ethical preferences as much as to address a commercial market. However, is “free range” product labelling accurately informing us as consumers and truly facilitating consumer choice?
The debate surrounding inadequate labelling and marketing of free range products is not new. However, a recent Federal Court case brought by the Australian Competition and Consumer Commission (ACCC) is a timely reminder that consumers do not always receive accurate information from food labeling.
No legislative definition of “free range”
Australia has consumer protection laws and food safety laws which cover many aspects of food labelling. However, problematically, there is no federal legislation requiring farming systems for animal-derived food products to be identified on product labels.
Consequently, the term “free range” is not subject to any legislative definition. Any restrictions on the use of the term are currently limited to egg carton labelling. It is therefore left to food producers, animal rights groups and the industry to determine what “free range” means for them. Generally, consumers assume that the term “free range” indicates that animals are not kept in close confinement, have access to the outside and are treated humanely. However, the term is open to broad interpretation and can easily be manipulated by producers and marketers.
While consumers may assume that “free range” equates to a minimum standard of enhanced animal welfare for the animals from which the food product is derived, this may not be the case and it will be greatly influenced by the standards applied by the food producer.
Australian Competition and Consumer Commission v C.I. & Co Pty Ltd [2010] FCA 1511
The Federal Court recently handed down its decision in a matter commenced by the ACCC against Western Australian egg wholesalers C.I. & Co Pty Ltd, Antonio Pisano and Anna Pisano. The ACCC claimed that the respondents had labelled and supplied cartons of eggs prominently using the words “free range” and “Fresh-Range Omega‑3” eggs, creating the overall impression that the eggs were free range, when in fact a substantial proportion of the eggs was not free range but caged.
Misleading and deceptive conduct finding
The court held that the egg wholesaler had engaged in conduct which was misleading or deceptive, falsely represented that goods were of a particular standard or quality of which they were not and that such conduct was liable to mislead the public as to the nature or characteristics of goods in contravention of the Trade Practices Act 1974 (now the Competition and Consumer Act 2010).
His Honour Justice North was particularly critical of the conduct, stating that it involved a high level of dishonesty and that it “amounts to a cruel deception of consumers who seek out free range eggs as a matter of principle”.
The judgment confirms that courts are willing to impose significant penalties upon businesses that advertise and label food products in a way that is likely to mislead the public. The penalty imposed on the respondents in this case was $50,000 plus costs.
The current provisions in respect of misleading and deceptive conduct and making false representations in relation to the sale of goods and services are contained in sections 18 and 29 of the Australian Consumer Law, which is embodied in Schedule 2 of the Competition and Consumer Act 2010. More information about misleading and deceptive conduct can be found at the website of the ACCC.
ACCC as enforcer of consumer protection laws
The ACCC enforces consumer protection laws contained in the Competition and Consumer Act 2010 and can take action against corporations and related individuals involved in misleading conduct. The ACCC focuses on industry-wide conduct to achieve outcomes and is more likely to take action in respect of misleading advertising if it has been carried out through a medium that reaches a wide audience, such as over the internet, on national television, or through a nation-wide print advertising campaign.
If you have suffered a loss as a result of misleading or deceptive conduct or misrepresentation, you may have a right of action under the Australian Consumer Law and be entitled to damages, an injunction or other orders against businesses found to have engaged in misleading or deceptive conduct.
For further information, please contact Swaab Attorneys?.
Co-authored by M Hall.
