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Focus: Food – September 2009

21 September 2009

Welcome to Allens' update on food legislation, policy, news and cases.

ACCC victory against misleading labelling

In brief: The Australian Competition and Consumer Commission has recently had a success in its ongoing campaign against misleading labelling on food, with the Federal Court1 making orders against a Western Australian food manufacturer for misleading claims under sections 52 and 53(eb) of the Trade Practices Act 1974 (Cth). Law Graduate Michelle Freeman and Senior Associate Ric Morgan report.

How does it affect you?

  • The Australian Competition and Consumer Commission (the ACCC) has a particular interest in protecting the public from misleading claims in relation to the origin of products.
  • Manufacturers must not make false claims; if they do, they risk prosecution and its associated damage.

Background

In late 2008 and early 2009, Western Australian food manufacturer and distributor Harvey Fresh made advertising and product packaging claims that two cheeses were 'Fresh from South West' and 'Truly 100 per cent Western Australian owned'. However, the products were made in Victoria by manufacturers Murray Goulburn Co-operative and Fonterra Cooperative Group. Harvey Fresh also ran advertisements in Western Australian newspapers proclaiming: 'Truly 100 per cent West Australian ... it's what makes Harvey Fresh different'.

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ACCC proceedings against Harvey Cheese

On 30 July 2009, the Federal Court declared that Harvey Fresh had engaged in misleading or deceptive conduct, or conduct likely to mislead or deceive, thereby contravening section 52 of the Trade Practices Act 1974 (Cth) (the TPA). Justice Siopis also declared that Harvey Fresh had contravened s53(eb), which relates to false or misleading representations concerning the place of origin of goods. The court's orders included:

  • an injunction against the company making false representations regarding the origin of its cheeses for a period of three years;
  • the implementation of an in-house compliance program to educate staff members on TPA requirements; and
  • corrective advertising on Harvey Cheese's website and in the newspapers that carried the misleading advertisements.

Harvey Cheese was also required to pay the ACCC's costs.

Justice Siopis commented that this

marketing strategy [was] designed to appeal to the desire of Western Australians to promote Western Australian products and interests, the implicit assertion by [Harvey Cheese] of a common bond between Western Australian consumers and the respondent and its products. Accordingly in my view it is important that the faith that Western Australian consumers place in [Harvey Cheese's] statements of the product origin is not misplaced.

Following the case, the ACCC's chairman Graeme Samuel said: 'The ACCC remains committed to protecting both the public and competing businesses against those which mislead consumers about the place of origin of their products.'

The judge's statement mirrors the ACCC's approach to these issues. Food manufacturers should be careful with claims regarding origin. If representations about origins become misrepresentations, there can be adverse consequences for manufacturers, as they can create a lack of trust in the product on the part of retailers and consumers, which has the potential to undermine brand reputation.

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Where to from here?

Food manufacturers should also remain alert for further potential changes to labelling requirements. The Food Standards Amendment (Truth in Labelling Laws) Bill 2009, if passed, will require the development of new standards relating to labelling. They would demand more precise and stringent labelling regarding ingredients' origin, including the ability only to use the word 'Australian' on, or in relation to, the relevant food if it is 100 per cent produced in Australia.

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Food Amendment (Regulation Reform) Act passed

In brief: The Victorian Parliament recently passed the Food Amendment (Regulation Reform) Act 2009 (Vic), implementing many of the food regulation reforms suggested by the 2007 Victorian Competition and Efficiency Commission. Law Graduate Michelle Freeman and Senior Associate Ric Morgan report.

How does it affect you?

  • The Food Amendment (Regulation Reform) Act 2009 (Vic) (the Act) emphasises increased regulatory efficiency, government and business cost-savings, and improved protection of public health.
  • The new classification scheme is likely to commence on 1 July 2010.
    • Classes of food premises changing from the current two to four is probable; as is
    • the reduction of compliance costs for low-risk businesses, such as wholesalers of pre-packaged foods or retailers of pre-packaged food that requires temperature control.

Background

The Victorian Government aims to reduce the cost for retailers of food regulation. The changes that will be implemented under the Act are aimed at simplifying food regulation at the retail level, both of food sold for immediate consumption and of the manufacturing of food for later retail sale or supply. A new classification scheme and governance improvements are scheduled to start on 1 July 2010. Registration of temporary and mobile food premises is to begin on 1 March 2011.

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New classes of food safety requirements

The biggest change to Victorian food regulation under the new Act is the planned increase in the classes of food premises from two to four. Under the old regime, food premises are divided into either Class 1, where they supply food to 'high-risk' groups such as the elderly, the infirm and ill, or the very young; or Class 2. The amendments allow the Secretary to declare classes of food premises, and to require that premises within such classes observe different requirements, such as staff training, auditing of premises and food safety programs.

The likely classes are:

  • Class 1 – 'high-risk' consumers (broadly the same as the old regime);
  • Class 2 – businesses that engage in 'handling of unpackaged food that requires temperature control', such as manufacturers of food, and restaurants;
  • Class 3 – businesses engaged in 'low-risk' enterprises, such as bakeries; and
  • Class 4 – 'very low-risk' activities, such as sausage sizzles and the sale of pre-packaged shelf-stable foods.

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Where to from here?

While the details are not yet finalised, it appears that Class 1 and 2 businesses will be subject to the same requirements as they are currently. The Government expects to be able to deliver administrative savings through the development of template food safety programs. Class 3 businesses look set only to need to keep a minimum set of records. The humble Class 4 sausage sizzle vendor may have to do nothing more than notify the local council about the food-handling activity.

If you would like more information, please contact any of the people below.

Footnotes
  1. Australian Competition and Consumer Commission v Harvey Fresh (1994) Limited [2009] FCA 853.

For further information, please contact:

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