In February 2020, the Australian Competition and Consumer Commission (ACCC) released its compliance and enforcement policy and priorities for 2020. Amongst the ACCC’s key enforcement priorities will be a focus on misleading conduct in relation to the sale and promotion of food products, including health and nutritional claims, credence claims and country of origin claims. This enforcement priority has been driven by what ACCC Chair Rod Sims refers to as “the growing community attention to health-related issues”.
When purchasing food products in supermarkets (or online), consumers are faced with what can feel like overwhelming choice. Goods become interchangeable and as such, consumers are paying increased attention to product packaging and marketing initiatives to differentiate between products. In this context, the ACCC considers that misleading claims about the nutrition or health of a product harms consumers, with Mr Sims highlighting that such claims can result in consumers paying premium prices without any benefit in return. As part of its priority for 2020, the ACCC aims to investigate this further.
Misleading claims on food packaging have the potential to cause substantial reputational and commercial damage to a business, as well as financial penalty. As recently as March 2018, the Federal Court required Heinz to pay a $2.25million penalty for breaches of the Australian Consumer Law in relation to its product SHREDZ. The Court found that the express and implied representations on the product packaging were misleading because they represented that the product was beneficial to the health of children aged 1-3. This was ultimately found to be false and misleading given the high quantity of sugar in the product having regard to World Health Organisation Guidelines. In addition to the monetary penalty, the decision garnered widespread media coverage, resulting in substantial reputational damage for Heinz’s business.
With the ACCC’s 2020 priorities list in mind, businesses producing and marketing food should take the opportunity to carefully review not only packaging, but also advertising materials aimed at consumers. This is particularly so in the current COVID 19 global pandemic environment as consumers will be increasingly unforgiving of misleading health claims. All representations made (whether they be express or implied) should therefore be accurate and able to be substantiated if ever challenged.
As an example in the context of healthy or nutritional claims, consumers are undoubtedly seeing a rise in references to alternative food options, such as gluten-free, dairy-free, high protein, low fat, no sugar and so on. In fact, such products are increasingly sectioned off in major supermarkets into their own aisle or shelf area. While the claims themselves may be accurate, it is important for businesses making such claims to ensure that the overall representation is not misleading. A product with high protein content may also have high sugar levels and fat content, and overall, not be a product which should be seen as “healthy”.
We have separately commented on the importance of accurate references for the country of origin of foods products and ingredients, following the recent change in labelling requirements. Our previous articles on this can be found here. However, in today’s heavily impacted COVID 19 environment we are seeing client’s being faced with the need for greater flexibility in their supply chains, which impacts the ability to apply a standard set of country of origin labels. We will shortly provide separate comments in this area.
Regulators are increasingly listening to the voice of consumers. This is particularly in the digital age where consumers are exposed to continual advertising and promotional claims, but also have the opportunity to voice opinions on publically viewable platforms. Businesses operating in consumer markets must remain vigilant and ensure that their marketing and promotional activities are not potentially misleading or deceptive or do not otherwise fall foul of applicable regulations.
A full summary of the ACCC’s 2020 enforcement priorities can be found here.