Australian Competition and Consumer Commission (“ACCC”) as a part of its compliance program undertakes market surveillance checks of food products to ensure that labels and advertising contain accurate information and comply with country of origin food labelling standards and the Australian Consumer Law.
All manufacturers, processors and importers of food products that offer food for retail sale including online sale in Australia must comply with the Country of Origin Food Labelling Information Standard 2016 (“the Food Labelling Standard”), the Australia New Zealand Food Standards Code (which applies in Victoria through the Food Act 1984 (Vic)) and the Australian Consumer Law[1].
Accurate labelling of food products is important so that consumers can avoid problem ingredients that could be harmful to them. Consumers also want to be informed about the origin of their food products including where they are grown, produced, made or packed and some are willing to pay extra for products that originate in Australia and/or are “organic” or “free range”.
Suppliers of food products should review their food labels and advertising to ensure that they accurately represent the ingredient composition and origin. Regular testing of products may also be required to ensure that the ingredients of their products are accurately stated in labels and advertising material.
Australian courts have imposed substantial penalties where false or misleading representations have been made in labelling and advertising of food products. The Australian Federal Court imposed a penalty of $300,000 on Derodi Pty Ltd and Holland Farms Pty Ltd trading as “Free Range Egg Farms” for making false or misleading representations in their labelling, promotion and advertising of eggs as “free range”, when this was not the case[2].
The ACCC issued an infringement notice on Conroys Pty Ltd for a monetary penalty of $10,200 because the ACCC had reasonable grounds to believe that Conroys had made a false or misleading representation about the place of origin of its bacon product in breach of the Australian Consumer Law. Conroy’s bacon product was labelled as “Product of Australia” when the product was made of imported pig meat[3].
The ACCC accepted court enforceable undertakings under section 87B of the Australian Consumer Law from ALDI Foods Pty Ltd (Aldi) and Monde Nissin (Australia) Pty Ltd trading as Menora Foods (Menora) in relation to labelling of products as “Oregano” , representing to consumers that their products contained only oregano when this was not the case. Tests of the composition of the “Oregano” products identified a substantial presence of olive leaves[4].
The ACCC also accepted court enforceable undertakings from Arnott’s Biscuits Limited in relation to false or misleading representations on its packaging of Shapes, Light & Crispy biscuits, in contravention of sections 18 and 29(1)(a) of the Australian Consumer Law. The packaging included the prominent statement “75% less saturated fat” along with “New”, Oven Baked Not Fried” and the “Shapes” stylised logo, when the biscuits in fact contained approximately 60% less saturated fat than Arnott’s original shape biscuits. ACCC also issued five infringement notices to Arnott’s in relation to the contravention totalling $51,000[5].
ACCC Country of Origin Food Labelling Requirements
Who must comply with the labelling requirements set out in the Food Labelling Standard?
All businesses offering food for human consumption for retail sale in Australia (e.g. food sold in stores or markets, online or from vending machines[6]) must comply with the labelling requirements set out in the Food Labelling Standard, unless the food is:
- sold to the public for immediate consumption by a restaurant, canteen, school, caterer or self-catering institution, prison, hospital or medical institution; or
- made and packaged on the premises where it is sold; or
- delivered, packaged and ready for consumption at the express order of the purchaser (except for a vending machine) (e.g. home delivered take-away); or
- sold at a fundraising event; or
- for special medical purposes[7].[8]
Businesses intending to export food for sale outside of Australia are not required to comply with the Australian labelling laws but must ensure that the labels comply with the laws of the country into which the food products are to be exported to.
What are the labelling requirements?
The labelling requirements are complex and different requirements apply depending on whether the food is:
- Grown, produced or made in Australia;
- Packaged in Australia;
- Grown, produced or made in another country;
- Packaged in another country.[9]
Different labelling requirements also apply to each of the following three categories of food:
- Packaged food, other than fresh fruit and vegetables in transparent packaging;
- Fresh fruit and vegetables in transparent packaging;
- Unpackaged meat, fish, fruit and vegetables.[10]
The ACCC publishes guidance for businesses about the food labelling system and how to apply and interpret the Food Labelling Standard.[11]
Implications of non-compliance with the Food Labelling Standard and Australian Consumer Law
Non-compliance with the Food Labelling Standard is an offence under the Australian Consumer Law, which attracts a penalty of up to $1.1 million for corporations and up to $220,000 for individual persons[12].
False, misleading or deceptive claims on food labels or in advertising of food products is also a contravention of sections 18 and 29(1) (a) and (k) of the Australian Consumer Law. Section 18 of the Australian Consumer Law prohibits suppliers of food products engaging in conduct that is misleading or deceptive or likely to mislead or deceive consumers in relation to the supply, promotion or advertising of the supplier’s products.
Section 29(1)(a) prohibits a supplier making false or misleading representations as to a particular standard, quality, value, grade or composition of food products. Section 29(1)(k) prohibits a supplier making false or misleading representations as to the origin of the supplier’s food products. A contravention of section 29(1) of Australian Consumer Law is an offence and can result in monetary penalties of up to $1.1 million for corporations and up to $220,000 for individual persons[13] being imposed by the court.
The ACCC can also issue infringement notices up to $108,000 for a listed corporation, up to $10,800 for a corporation and up to $2,160 for an individual for each contravention of the Australian Consumer Law[14].
The ACCC can also take court proceedings for contraventions of sections 18 and 29 of the Australian Consumer Law and seek an injunction and/or an award of damages[15], a publication order and other remedial order[16]. Consumers and suppliers of competitive food products may also take court action seeking injunctive relief and claiming damages or compensation for loss or damage suffered.[17]
What is the ACCC likely to do if a business has failed to comply with the Food Labelling Standard and the Australian Consumer Law?
The ACCC has significant enforcement powers under the Australian Consumer Law and can require suppliers of food products to:
- ‘Substantiate’ any claim that has been made on food labels and in advertising by providing to the ACCC information/documentation (including test results) about the claims it has made.[18]
- Undertake ongoing testing of its food products to ensure that the ingredient composition corresponds with the labels and advertising claims.
- Provide Court enforceable undertakings to the ACCC that the supplier will refrain from engaging in conduct in breach of the Food Labelling Standard and the relevant provisions of the Australian Consumer Law[19].
- Refund money and/or destroy and dispose of food products that do not comply with the Food Labelling Standard and/or contravene the Australian Consumer Law;
- Establish a compliance program and complaints handling system[20].
How Stephens Lawyers & Consultants can assist
Stephens Lawyers and Consultants can assist businesses involved in the manufacturing, processing, importing and supply of food products with:
- Identifying potential areas of risk of contravention of food labelling laws and the Australian Consumer Law
- Development and implementation of risk management frameworks
- Development of compliance and training programs
- Responding to investigations undertaken and enquiries made by the ACCC
- Responding to ACCC production notices under s155 of the Australian Competition and Consumer Act for the furnishing of information, production of documents or giving of evidence
- Responding to search warrants obtained by the ACCC to search premises and computers for evidence of contravention of the Australian Competition and Consumer Act and to remove documents and other material evidence into the custody of the ACCC
- Responding to complaints or legal letters from consumers or competitors concerning food labelling and advertising and alleging contravention of the Australian Competition and Consumer Act
For further information contact:
Katarina Klaric
Principal/Director
Stephens Lawyers & Consultants
Suite 205, 546 Collins Street
Melbourne VIC 3000
Phone: (613) 8636 9100
Fax: (613) 8636 9199
Email: [email protected]
Disclaimer: This Information Sheet is not intended to replace obtaining legal advice.
Authored by Katarina Klaric and Emma Contebardo, Stephens Lawyers & Consultants.
Copyright October 2018, Stephens Lawyers & Consultants.
[1] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), sections 18 and 29.
[2] ACCC v Derodi Pty Ltd [2016] FCA 365.
[3] ACCC Media Release dated 20 August 2015, “ACCC acts on Conroys “Product of Australia” misrepresentation”, <https://www.accc.gov.au/media-release/accc-acts-on-conroys-“product-of-australia”-misrepresentation>.
[4] ACCC Media Release dated 9 November 2016, “ACCC acts on ‘Oregano’ misrepresentations”, <https://www.accc.gov.au/media-release/accc-acts-on-‘oregano’-misrepresentations>.
[5] ACCC Arnott’s Biscuits Ltd-s.87B Undertaking dated 20 November 2015, <https://www.accc.gov.au/public-registers/undertakings-registers/s87b-undertakings-register/arnott’s-biscuits-ltd-s87b-undertaking>.
[6] ACCC, Country of Origin Food Labelling <https://www.accc.gov.au/business/advertising-promoting-your-business/country-of-origin-claims/country-of-origin-food-labelling>.
[7] ‘food for special medical purposes’ is defined in section 1.1.2-5 of the Australia New Zealand Food Standards Code.
[8] Country of Origin Food Labelling Information Standard 2016, Part 2, section 14.
[9] Country of Origin Food Labelling Information Standard 2016, Part 1, section 6.
[10] Country of Origin Food Labelling Information Standard 2016, Part 1, section 6.
[11] ACCC Publication, ‘A guide for business: Country of Origin Food Labelling’, <https://www.accc.gov.au/publications/country-of-origin-food-labelling>.
[12] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), sections 136, 203 & 224.
[13] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), section 224.
[14] Competition and Consumer Act 2010 (Cth), section 134A-134C.
[15] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), sections 232 & 236.
[16] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), sections 237-241 & 246-248.
[17] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), sections 236, 237, 242 & 243.
[18] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), section 219.
[19] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), section 218.
[20] Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), section 246.