Current Developments

Date Published

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FoodLegal Lawyers and Consultants

© Lawmedia Pty Ltd, October 2011

• Coles notifies suppliers that they must comply with Competition & Consumer regulations concerning warranties against defects.
• ACCC sues two Victorian meat suppliers for misleading ‘King Island’ claims.
• The ACCC commences legal action against chicken meat companies in the Federal Court for allegedly misleading consumers with “free to roam” claims.
• Industry leads push for reform of wine taxation in Australia.
• FSANZ reports feedback on Bacteriophage processing aid (Application A1045)
• Aldi wins case against ePAL in the Federal Court.
• US food safety reforms.

1. Coles notifies suppliers that they must comply with Competition & Consumer regulations concerning warranties against defects

Coles has notified suppliers that from 1 September 2011, Coles, Pick & Pay and Bi-Lo will no longer accept stock that is not compliant with Australian Competition and Consumer Regulations 2010 concerning warranties against defects.

Of note, Regulation 90 will commence on 1 January 2012. The Regulation requires warranties against defects to:

• be in a document that is transparent;
• concisely state what the person who gives the warranty must do so that the warranty may be honoured and what the consumer must do to entitle them to claim the warranty;
• set out the procedure for the customer to claim the warranty including the address to which a claim may be sent;
• state who will bear the expense of claiming the warranty;
• state that the benefits to the consumer given by the warranty are in addition to other rights and remedies of the consumer under law.

Additionally, any product carrying a warranty against defect must include the exact text:

Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.

Not all warranties are caught.

It is recommended that FoodLegal review your product warranties to determine whether additional text is required or alternatively consider removing the warranty.

1. ACCC sues two Victorian meat suppliers for misleading ‘King Island’ claims

On 25 August 2011, the Australian Competition and Consumer Commission (ACCC) instituted legal proceedings in the Federal Court, Melbourne, against two Victorian meat retailers alleging false and misleading representations about meat claimed to originate from King Island, Tasmania.

The ACCC alleges that Hooker Meats Pty Ltd trading as ‘Peninsula Bulk Meats’, misrepresented in newspaper advertisements and on their website that meat they supplied was grown on King Island.

The ACCC also alleges that Kingisland Meatworks & Cellars Pty Ltd and its director misrepresented in newspaper advertisements and on their website that a significant proportion of meat supplied was grown on King Island.

The ACCC is seeking declarations that the companies contravened the Trade Practices Act 1974 and the Competition & Consumer Act 2010, and is seeking: injunctions, pecuniary penalties, corrective notices, costs, orders that the companies establish and maintain a compliance program.

The proceedings were filed in the Federal Court’s Fast Track List with conferences scheduled early October.

1. The ACCC commences legal action against chicken meat companies in the Federal Court for allegedly misleading consumers with “free to roam” claims

On 7 September 2011, the Australian Competition and Consumer Commission (ACCC) instituted proceedings in the Federal Court, alleging misleading or deceptive conduct in relation to the promotion and supply of chicken products.

The ACCC is taking action against Baiada Poultry Pty Ltd and Bartter Enterprises Pty Ltd which supply chickens nationally under the Steggles brand, Turi Foods which supplies La Ionica brand meat chickens in NSW and Victoria and the Australian Chicken Meat Federation Inc, which is the peak body of Australia’s chicken meat industry.

The ACCC alleges the companies made misleading or deceptive claims through their advertising, in particular when using term "free to roam in large barns”.

The ACCC is seeking the following orders:

• pecuniary penalties;
• declarations;
• injunctions;
• orders that the processor respondents publish corrective notices in newspapers and magazines and, in respect of ACMF, on its website;
• orders that the respondents implement trade practices compliance programs; and
• costs.

The Blewett Food Labelling Review Panel’s ‘Labelling Logic’ report released in January recommended that relevant livestock industries consider the benefit of establishing agreed standards for terms relating to animal husbandry (e.g. free range, barn-laid etcetera) because of concerns that labelling practices did not match consumer understanding.  

1. Industry leads push for reform of wine taxation in Australia

The much-anticipated tax forum is to be held on 4 and 5 October at Parliament House in Canberra. It will focus on the topics covered in the latest tax review “Australia’s Future Tax System Review” published in 2010.

Big wine producers like Treasury Wine Estates and Premium Wine Brands have taken the opportunity to push for abolition or substantial reform of the Wine Equalization Tax (WET) rebate and move to the taxation of wine on a volumetric and revenue neutral basis.

Wine producers say the current taxation of wine contributes to Australia’s “wine glut” which is threatening the sustainability of the industry.

The Alcohol Education & Rehabilitation (AER) Foundation has also called for reform of the WET rebate, saying the tax makes “no sense” for the economy, the wine industry or the health of Australians. The AER Foundation has previously commissioned a report from the Allen Consulting Group called “Alcohol Tax Reform- Starting with the Wine Equalization Tax”. The report found that the WET rebate contributes to Australia’s wine glut by rewarding producers of cheap poor quality wines and propping up inefficient producers.

The 2010 Henry Tax Review considered the WET rebate and found it to be inequitable. However, the federal government had announced its opposition tor reform of the system.

• Food Standards Australia New Zealand (FSANZ) reports feedback on Bacteriophage processing aid (Application A1045)

FSANZ is calling for public submissions by Tuesday 1 November 2011 on an application for a new processing aid that is intended to reduce the risk of the food poisoning bacteria Listeria.

In September, EBI Food Safety Ltd applied for permission to use a bacteriophage preparation called P100 as a processing aid for ready-to-eat foods to reduce levels of Listeria monocytogenes.

To be legally used in food production, processing aids must undergo a rigorous safety assessment by FSANZ.

Bacteriophages infect bacteria and multiply inside them until the bacteria breaks down. They are naturally present in high numbers in the environment, in saltwater, freshwater, soil, plants and animals (including people) and food. Bacteriophages infect very specific strains of bacteria so the P100 bacteriophage is not expected to infect any other bacteria except Listeria.

Currently, the Food Standards Code permits no tolerance of Listeria monocytogenes in several foods.  

The use of bacteriophage preparations to treat food has been approved in the United States, Canada and the Netherlands.

•     Aldi wins case against ePAL in the Federal Court

On September 29 2011, Aldi won its case against ePAL (the company managing eftpos) in the Federal Court of Australia. The court found ePAL liable for misleading and deceptive conduct under the Competition and Consumer Act 2010.

Aldi brought the action against ePAL concerning two media releases and a news report about the new ePAL system changes, alleging this material contained misleading statements.

Justice Peter Jacobson of the Federal Court ruled that ePAL had misled consumers by claiming in advertisements and media releases that shoppers “should not face new charges” for Eftpos. He ordered ePAL to publish corrective advertisements to state that “ePAL is aware that some acquirers are intending to pass part or all of these fee changes on to some retailers”.

The ePAL payment system is changing for Eftpos from 1 October 2011. From 1 October, the retailer’s bank will have to pay an “interchange fee” of up to 15c to the shopper’s bank when a customer uses the Eftpos payment system.

The ePAL company is partly owned by the two major supermarket groups Woolworths and Coles. Therefore, any retailers outside the two major retailing groups must now consider the possibility of imposing an extra Eftpos charge to recoup part of the interchange fee.

Some retailers are likely to pass on the new expense of the “interchange fee”, in whole or in part, as a surcharge on customer payments made by Eftpos, similar to charges by retailers for credit card payments.

1. US food safety reforms

Earlier this year, the US Congress passed into law a series of food safety reforms including strict new requirements for importers.

The Food Safety Modernization Act seeks to prevent food borne illness and ensure foreign manufacturers meet the same standards as domestic producers. It is expected to have a significant impact on companies which export food to the US.