Court orders poultry companies to pay for ‘misleading claims’

Posted by AFN Staff Writers on 4th November 2013

The Federal Court of Australia has ordered Baiada Poultry Pty Ltd and Bartter Enterprises Pty Ltd, the processors and suppliers of Steggles branded chicken products, to pay a total of $400,000 in civil pecuniary penalties, while duck processor and supplier Luv-a-Duck Pty Ltd (Luv-a-Duck) has been ordered to pay $360,000.

1. Baiada and Bartter charged on ‘free to roam’ claims

The Court declared that Baiada and Bartter engaged in false, misleading and deceptive conduct (or conduct liable to mislead and deceive) when it described on product packaging and in advertising that its meat chickens were ‘free to roam in large barns’.

The Court declared that prior to day 42 of a growth cycle that could be up to 56 days the companies’ chickens were, in fact, kept at such stocking densities that they did not have a largely uninhibited ability to move around at will in an aimless manner.

The Australian Chicken Meat Federation Inc (ACMF), the peak industry body for Australia’s chicken meat industry, was also ordered to pay $20,000 in penalties.

The Court declared ACMF engaged in false, misleading and deceptive conduct (or conduct liable to mislead or deceive), when it claimed in publications on its website that meat chickens produced in Australia were ‘free to roam’ or able to ‘roam freely’ in large barns. The Court made its declaration against ACMF confined to the extent that they relate to the stocking densities of Baiada and Bartter’s meat chickens and that of Turi Foods Pty Ltd.

Turi Foods, the processor and supplier of La Ionica Poultry products, was previously a respondent in the matter but had settled its proceedings with the ACCC in December 2011. The Court handed down its findings in July 2013 against the remaining respondents, Baiada, Bartter and the ACMF, after the ACCC instituted proceedings in September 2011.

Credence claims are a ‘priority area’

“Credence claims, which represent that a product possesses a premium attribute, are a priority area for the ACCC; particularly those in the food and beverage industry with the potential to influence consumers and disadvantage competitors,” said Rod Sims, ACCC Chairman.

“Consumers are increasingly making purchasing decisions that value the types of claims that directly affect the integrity of the product, such as where or how something was made, grown or produced,” Mr Sims said.

“Consumers must be able to trust that products match descriptions so they can make informed purchasing decisions. Misleading credence claims can also undermine the level playing field and disadvantage other suppliers,” Mr Sims said.

In making its orders, the Court also ordered ACMF to send a precribed letter to its members advising of the Court outcome, with a copy of the Court’s judgment enclosed, and ordered ACMF’s staff to attend trade practices compliance training.

The Court will consider submissions from the parties as to costs.

Justice Tracey’s earlier judgment, reported by Australian Food News in January 2012, against Turi Foods for engaging in false, misleading and deceptive conduct in relation to similar conduct, included orders by consent that Turi Foods pay a pecuniary penalty of $100,000, publish corrective advertisements and implement a compliance training program.

2. Luv-a-Duck ‘misleading claims’ issues

The Federal Court order that Luv-a-Duck pay $360,000 in civil pecuniary penalties following action by the ACCC was made by consent order. The Court also ordered Luv-a-Duck to pay $15,000 towards the ACCC’s costs.

Luv-a-Duck is a large supplier of duck meat products, with a market share of about 40 per cent for duck meat products in Australia, selling around 80,000 ducks per week.

The Court declared by consent that Luv-a-Duck engaged in misleading or deceptive conduct (or conduct likely to mislead or deceive) and made false representations by using words on its packaging, website, brochures and in a promotion for the Good Food and Wine Show in Adelaide in 2012, that its ducks were:

‘grown and grain fed in the spacious Victorian Wimmera Wheatlands’; and/or
‘range reared and grain fed’ (which mainly appeared as a logo).

The ACCC argued that these descriptions represented Luv-a-Duck’s duck meat products were or will be processed from ducks that:

spent at least a substantial amount of their time outdoors;
were raised in a spacious outdoor environment; and
were of a different quality than duck meat products processed from barn-raised ducks,

when this was not the case.

In fact, the ACCC said the duck meat products that Luv-a-Duck sold or offered for sale were processed from ducks that did not spend any of their time outside of their barn.

Justice Davies stated it was reasonable to infer that Luv-a-Duck’s representations “…would have been an inducement to consumers to prefer Luv-a-Duck’s products and give Luv-a-Duck a competitive advantage in the industry.”

“This penalty is a further warning to the poultry industry and businesses generally that consumers are entitled to trust that what is said on product packaging and other promotional product material is true and accurate,” said Sarah Court, ACCC Commissioner.

“Traders who abuse the trust of Australian consumers may also find themselves exposed to similar enforcement action,” Ms Court said.

“Credence claims which represent that a product possesses a premium attribute are a priority area for the ACCC, particularly those in the food and beverage industry with the potential to influence consumers and disadvantage competitors,” Ms Court said.

Other restraints and impositions on Luv-a-Duck

In addition to the penalties and costs, the Court also made consent orders:

restraining Luv-a-Duck for a period of three years from using the phrases ‘grown and grain fed in the spacious Victorian Wimmera Wheatlands’ and ‘ranged reared and grain fed’ or modifications of those words when its ducks are not raised in such conditions;
requiring Luv-a-Duck to publish corrective notices on its website and business premises and send a corrective notice to its customers; and
requiring Luv-a-Duck to implement and maintain a trade practices compliance program for three years.