A country of origin claim is a statement you make regarding where a product is sourced from. Generally, a country of origin claim is displayed as a “product of”, “grown in” or “made in” statement. In this article, we look at examples whereby businesses fell foul of Australia’s Consumer Law (ACL) by incorrectly identifying and labelling the product’s country of origin. We will also consider what penalties the ACCC enforced against them.
The Australian Consumer Law and Terminology
Under section 255 of the ACL:
“Product of” and “Grown In” claims are claims that each significant ingredient or component of a product originated in the country claimed, and that virtually all of the production process occurred in that country.
“Made in” claims are representations that 50% or more of the total cost of producing the good is incurred in the country claimed, and that most of the production process has occurred in that country.
Sections 29(1)(k) and 151(1)(k) of the ACL specifically prohibit all false or misleading claims about the place of origin of a good.
Case Study: Patties Foods
Early in 2015, Patties Foods recalled its Nanna’s Mixed Berries and Nanna’s Raspberries after 18 people contracted Hepatitis A. The berries were grown in Chile and China, before being packaged in a Chinese factory. The berries were labelled as “Made in China”.
Case Study: United States Meat Product Labelling
A six-year stoush between the United States, Canada and Mexico is ongoing. Canada and Mexico argue that the United States’ food labelling laws unfairly discriminate against imports of meat products, in violation of global trade rules. This isn’t a case of misrepresentation, but it does highlight the high stakes involved in food labelling.
Fruit Mince Pies: A Fictitious Example of Acceptable Conduct
Let’s imagine a business sells ‘Premium Fruit Mince Pies’, labelled as ‘Made in Australia’. A business sources the pastry and fruit mince filling in Australia, and then constructs, bakes and packages the pie in Australia. The fruit in the fruit mince is sourced from New Zealand. It is likely that more than 50% of the total cost of producing the mince pies is incurred in Australia and, therefore, would not be false or misleading.
Busted! ACCC Penalties
The ACCC meets contraventions of the ACL with significant monetary and non-monetary penalties. The ACCC can levy pecuniary penalties (a civil penalty) for:
- false or misleading conduct,
- pyramid selling, or
- unconscionable conduct.
The maximum penalty for this conduct is:
- $1.1million for corporations; and
- $220 000 for individuals.
The ACCC does not limit its enforcement and compliance options to pecuniary penalties. The ACCC can use enforceable undertakings, injunctions, criminal proceedings and compensation orders to penalise companies and individuals who have contravened the ACL.
Key Takeaways for Business
So, what does your business need to remember? Firstly, the ACL does not require you to make a country of origin claim. However, other legislation may require you to do so, such as the Australia New Zealand Food Standards Code or the Commerce (Trade Descriptions) Act 1905.
Also, a business can make any origin claim providing it is not false or misleading. Lastly, businesses should have a reasonable basis for making country of origin claims and be able to substantiate their claims if required. If you are unsure or have any questions about a country of origin claim, get in touch with one of our experienced consumer lawyers on 1300 544 755.