Eggs-aggerated “Free Range” labelling misleading and deceptive: ACCC

Eggs-aggerated “Free Range” labelling misleading and deceptive: ACCC

Eggs-aggerated “Free Range” labelling misleading and deceptive: ACCC

Australian Competition and Consumer Commission (ACCC) v C.I. & Co Pty Ltd [2010] FCA 1511

The Federal Court of Australia has found that Western Australian egg wholesalers C.I & Co Pty Ltd, Antonio Pisano and Anna Pisano, misled the public between 2004 and 2010 by supplying cartons of eggs labelled as “Free Range” and “Fresh Range-Omega 3” when a substantial proportion of the eggs came from caged hens.

The deceptive nature of the labels

The court declared that the respondents had contravened the Trade Practices Act 1974 (Cth) (TPA) by engaging in misleading and deceptive conduct in falsely representing that the eggs were produced by “a different circumstance of production”. In his judgment, Justice North found that the respondents’ conduct was particularly reprehensible because it involved a high degree of deception. “The conduct amounted to a cruel deception on consumers who mostly seek out free range eggs as a matter of principle, hoping to advance the cause of animal welfare by so doing.”

The penalty imposed by the Court

The orders made by the Court included declarations that the respondents had breached the TPA, injunctions against the second and third respondents to prevent the recurrence of the conduct, requiring the second and third respondents to send an apology letter to customers advising of the Court’s judgment and to cause to be published a notice of apology in a Western Australian newspaper, payment by the second respondent of a pecuniary penalty of $50,000, and the payment by the respondents of the ACCC’s costs in the proceeding. The maximum penalty for each contravention is $220,000, however, due to particular circumstances in this case, the penalty related only to the conduct of the second respondent in a short period, namely 15 days in the case of the Free Range labelled eggs, and six to eight weeks in the case of the Fresh Range-Omega 3 labelled eggs.

Broader lessons for producers and retailers

The Australian Consumer Law (ACL), which replaced the TPA on 1 January 2011, prohibits corporations and individuals from engaging in misleading or deceptive conduct and from making false representations about goods or services. The ACCC can take action to enforce the provisions of the ACL and severe penalties may be imposed. The ACL also provides a statutory basis for consumers to take civil action in relation to misleading or deceptive claims and for other individuals and corporations to seek remedies to protect their intellectual property rights.

For advice on product labelling and packaging laws and the new Australian Consumer Law please contact the authors.