ACCC v Snowdale Holdings Pty Ltd (No 2) [2017] FCA 834: Egg Producer Penalised for Misleading Claims

In the recent judgment of ACCC v Snowdale Holdings Pty Ltd (No 2) [2017] FCA 834 (25 July 2017), the Federal Court has ordered Snowdale Holdings Pty Ltd (Snowdale) to pay penalties totalling  $750,000 for making false or misleading representations that its eggs were “free range”, in proceedings brought by the Australian Competition and Consumer Commission (ACCC). The ACCC also brought action against Snowdale Holdings in 2014 over its farms in Carabooda and the Swan Valley in Perth's north.

Background to the Judgment

Snowdale is one of WA’s largest egg producers. It supplies eggs labelled as cage, barn laid and free range to various retailers and supplied eggs labelled as “free range” in WA under brands including Eggs by Ellah, Swan Valley Free Range and Wanneroo Free Range. Snowdale also promoted its eggs as “free range” on the Eggs by Ellah website from May 2013.

In May 2016, the Federal Court found that Snowdale’s labelling of its eggs as “free range” between April 2011 and December 2013 was misleading or deceptive, and amounted to false or misleading representations. The Court found that most of the hens from Snowdale’s sheds did not go outside as the farming conditions significantly inhibited them from doing so. These conditions included the number of pop holes, the number of birds per metre of pop hole, the flock size inside the shed and the shed size.

In April 2017, Commonwealth, State and Territory Consumer Affairs Ministers introduced a national Information Standard [Australian Consumer Law (Free Range Egg Labelling) Information Standard 2017] under the Australian Consumer Law (the ACL, which is contained in Sch 2 to the Competition and Consumer Act 2010 (Cth)). The standard requires eggs labelled as “free range” to have been laid by hens with meaningful and regular access to the outdoors and with a maximum outdoor stocking density of 10,000 hens.

The ACCC Reaction

ACCC Commissioner Mick Keogh said consumers paying for premium products should have an expectation they will not be "duped" by producers making false claims. He said:

The ACCC investigations revealed the company sold 71 per cent of its eggs as “free range” from 2012-2013 and charged consumers a premium for them.

The Judgment

In the current action, Siopsis J has also made an order preventing Snowdale from using the words “free range” [at para 23] in connection with its eggs unless the eggs are produced by hens that are able to go outside on ordinary days, and most of which actually go outside on most days.

Snowdale was also ordered to implement a consumer law Compliance Program [see Annexure 6 of judgment] and pay a contribution towards the ACCC’s costs.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.

ACCC v Snowdale Holdings Pty Ltd (No 2) [2017] FCA 834 (25 July 2017)

Egg producer penalised $750,000 for misleading 'free range' claims – ACCC Media Release MR 120/17

False labelling of 'free range' WA eggs costs company more than $1m – watoday.com.au