ACCC institutes proceedings against ‘free-range’ egg producers

Posted by AFN Staff Writers on 11th December 2013

The Australian Competition and Consumer Commission (ACCC) has filed separate proceedings in the Federal Court against egg producers in Western Australia (WA) and New South Wales (NSW) alleging that each of the producer’s use of “free-range” was misleading.

The ACCC alleges that Snowdale Holdings Pty Ltd (Snowdale) in WA and Pirovic Enterprises Pty Ltd (Pirovic) in NSW, through the use of words and images, made false, misleading or deceptive representations by the images and wording on their egg cartons and websites to the effect that the eggs supplied and labelled as “free range” were produced:

by hens that were farmed in conditions so that the laying hens were able to move about freely on an open range every day;
and/or by hens, most of which moved about freely on an open range on most days.

The ACCC alleges that the eggs supplied by each of Snowdale and Pirovic were produced by hens that were not able to move about freely on an open range each day because of the:

stocking densities of the barns the hens were housed in;

physical openings of the barns;
conditions of the outdoor range;
and/or manner in which the hens were trained in the barns

The ACCC also alleges that the eggs supplied by each of Snowdale and Pirovic were produced by hens most of which did not move about freely on an open range on most days.

“The ACCC does not have a role in determining whether particular farming practices are appropriate and the ACCC is not debating the merits of cage, barn or free range systems,” said Rod Sims, ACCC Chairman.

The ACCC said its concern was to ensure that the labelling of eggs “accurately reflects the particular farming practices of the producer and the expectations of a consumer making purchasing choices based on those representations”.

“Credence claims such as free range, organic, place of origin or country of origin are all powerful tools for businesses to distinguish their products, but misleading consumers who may pay a premium to purchase such products damages the market and is unfair to competitors,” Mr Sims said.

“These matters form part of a continuing investigation by the ACCC into free-range claims made by egg producers, which has involved the ACCC serving substantiation notices on a number of egg producers that supply eggs labelled as free-range,” Mr Sims said.

The ACCC is seeking declarations, injunctions, pecuniary penalties, implementation of compliance programs, corrective notices and costs against each producer.

The Snowdale proceedings are set down for a directions hearing in Perth on 23 January 2014. The Pirovic proceedings are set down for a directions hearing in Sydney on 4 February 2014.

Background

Snowdale is one of Western Australia’s largest egg producers. It produces eggs labelled as ‘cage’ eggs, ‘barn laid’ eggs and ‘free-range’ eggs to various retailers.

Pirovic is one of the largest independent egg producers in New South Wales and supplies eggs labelled as ‘cage’, ‘barn laid’, ‘free-range’ and ‘organic free-range’, and a variety of liquid egg products to retailers nationally.

In April 2013 the ACCC served substantiation notices on a number of egg producers that supplied eggs labelled as free range. A substantiation notice requires a person or business to give information or produce documents that could be capable of substantiating or supporting a claim or representations made in trade of commerce.

Following that process and wider investigation, the ACCC said it was concerned that there are attributes of the farming systems used by some egg producers that indicate that the eggs should not be labelled as ‘free-range’.

The ACCC considers that a ‘free-range’ claim by any producer is a representation that the eggs were produced by hens that were “able to move freely on an open range each day and most of the hens did in fact move freely on that open range”.

The ACCC said it understands that there are a number of farming conditions that impact on whether hens are able to, and do, move freely on an open range each day. The conditions (and their impact) vary between producers and no single condition of itself is conclusive. The relevant conditions include:

the internal stocking density of sheds;
the conditions of the internal areas the hens are housed in;
the number, size and location of any openings to an outdoor area;
the time of the day and how regularly the openings are opened;
the size and condition of the outdoor area, including any shaded areas, the presence of food, water and different vegetation and ground conditions;
the stocking density of any outdoor area; and
whether the hens have been trained or conditioned to remain indoors.

Australian Food News reported earlier this week that New South Wales Fair Trading had called for a national enforceable standard for ‘free-range’ eggs, after a ‘super-complaint’ from consumer group CHOICE in August 2013.