Free Range Egg Claims Results in False Representation Ruling
Wednesday 24 September 2014 @ 9.45 a.m. | Trade & Commerce
The Federal Court has declared that Pirovic Enterprises Pty Ltd engaged in misleading conduct in the case of ACCC v Pirovic Enterprises Pty Ltd (No 2) [2014] FCA 1028. The court found that Pirovic had misled consumers by claiming that their egg product was free range when it then admitted that this was not the case.
Background
This case forms part of the Australian Competition and Consumer Commission’s (ACCC) investigation into free range claims made by a number of egg producers across Australia. The ACCC alleged that Snowdale Holdings Pty Ltd and Pirovic in NSW had misled consumers by making false representations. The companies had used images and words on their egg cartons to indicate that the eggs were free range eggs when in fact this was not the case.
Court Finding
The court found that, through the admission of Pirovic, the eggs supplied by Pirovic were produced by hens, most of which did not move about on an open range because of a combination of factors. These factors include the stocking densities inside the barns where the hens were housed; the flock sizes inside the barns; and the number, size and placement and operation of the physical openings to the open range.
The Court found that by promoting the eggs as free range, Pirovic had engaged in misleading and false representation of their product. The Court ordered that Pirovic pay a pecuniary penalty of $300,000 and contribute to the ACCC’s legal cost.
Principle
ACCC Chairman Rod Sims explains:
“Credence claims such as free range claims are powerful tools for businesses to distinguish their products. However, if they are false or misleading, they serve to mislead consumers, who may pay a premium to purchase such products...This decision provides very clear guidance that any free range egg claim must be backed by farming conditions and practices implemented by suppliers under which hens actually move about on an open range each day.”
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