FoodLegal

How the ACCC plans to enforce Country of Origin

By Joe Lederman (FoodLegal Co-Principal) and John Thisgaard (FoodLegal Senior Associate)

© Lawmedia Pty Ltd, August 2018

Australia’s new Country of Origin Labelling laws became mandatory for all food products labelled for sale in Australia on 1 July 2018. Shortly before this date, the Australian Competition and Consumer Commission provided some guidance as to just how it will be enforcing the new laws. This article explains how the ACCC’s announcement will impact food businesses, and provide an overview of the main requirements that companies should be aware of.

New Country of Origin laws have taken effect

On 1 July 2018, Australia’s much-publicised new Country of Origin Labelling laws became mandatory. The new laws are found in the Country of Origin (Food Labelling) Information Standard, (the Information Standard) which was introduced after much consumer consultation on 1 July 2016 with the intention of giving businesses a two year transition period in which they could make their labels compliant with the new requirement.

The new laws are notable for numerous reasons. Firstly, they have virtually re-written Australia’s requirements for Country of Origin claims by introducing sweeping changes. The laws now group products depending on whether they are “priority” or “non-priority”; require the use of a bar chart indicating the Australian content for specific products; require increased transparency on labelling for products from overseas; and introduce new style requirements.

Furthermore, the new laws are regulated completely differently to the previous ones. Prior to 1 July 2016, the Country of Origin laws were found in the Australia New Zealand Food Standards Code (Food Standards Code), together with other food labelling requirements. They were developed by Food Standards Australia New Zealand and enforced at a local level by the food regulatory agencies of each Australian State and Territory. The Information Standard was made under the Australian Consumer Law and exists as its own legislative instrument separate to the Food Standards Code. It is to be enforced by the Australian Competition and Consumer Commission (ACCC), which is a federal regulatory agency with better financial resources and a wider regulatory reach than the State and Territory food regulators.

It is also notable that the Information Standard was developed by the federal Department of Industry, Innovation and Science, which is not a food regulatory body, and that the Information Standard was not required to pass federal parliament like other pieces of legislation.

What is the ACCC going to do?

On 26 June 2018 the ACCC announced that it will commence its enforcement of the new Information Standard by undertaking market surveillance. The ACCC will perform checks on 10,000 randomly selected food products to assess industry compliance with the new laws.

ACCC Deputy Chair Mick Keogh said:

We’ve been providing guidance for businesses over the past two years about the new food labelling system, including how to apply and interpret the standard. We are now entering the compliance phase, where we are making sure businesses are presenting accurate information about country of origin to their customers…

We have people on the ground to carry out these inspections and will initially focus on fresh or short shelf products sold by supermarkets, both large and small. We will raise concerns with businesses where we believe there is an issue with country of origin labelling. As always, we are able to escalate cases which warrant stronger action. [emphasis added]

Upon introduction of a new set of laws, it is usual for regulators to initially focus on industry education and course-correction to facilitate widespread compliant uptake of the laws. These comments indicate that the ACCC believes that much of this educative phase took place during the two-year transition period. As such, it is moving straight into more of an enforcement role, by directly assessing products to identify non-compliances.

Although educative material was released prior to 1 July 2018, it does not serve to provide definitive guidance on every aspect of the Information Standard. Previous editions of FoodLegal Bulletin have highlighted legitimate queries and anomalies that exist in the new Country of Origin laws. By moving straight into the compliance phase, businesses struggling with the interpretation of borderline issues may not receive the required support that will allow them to comply with the obligations.

The other point that industry should be aware of is that the ACCC will primarily focus on supermarket products with a short shelf life (presumably because their labels are more likely to have been applied since 1 July 2018 and are therefore subject to the new laws), placing these products at the most risk of regulatory scrutiny and compliance action.

The ACCC will have a number of options once it completes its market survey. The above statements indicate that it will seek to correct identified non-compliances by escalating its enforcement action. However, if the survey indicates widespread industry non-compliance across particular areas of the Information Standard, the ACCC may have little choice than to take a more educative approach.

What should companies be aiming to get right?

Beyond its emphasis on supermarket products with a short shelf life, the ACCC has not expressly indicated what aspects of the Country of Origin requirements it will be focusing on. However, there are a number of key components of the Information Standard of which food companies should be particularly aware when bringing their products to market:

·         Use of the kangaroo logo. The much sought-after kangaroo logo may only be applied to foods that have been made, produced or grown in Australia. Changes to the test for whether a product has been “made in” a particular country means that the threshold as to whether or not a product can have the kangaroo logo on its label is different. Where a product contains some imported ingredients, a company should ensure that the product meets the test for “made in” should they wish to use the kangaroo logo.

·         Identification of Australian content. Most products that have been grown, made, produced or packaged in Australia must include a bar chart that identifies the minimum amount of Australian content in that pack. There are specific requirements as to how this must be done, including what counts as an Australian ingredient, how values must be rounded, and how averages may be declared when Australian content varies over time.

·         Categorisation as a priority or non-priority food. Products have different Country of Origin Labelling obligations depending on whether they are “priority” or “non-priority” foods. Non-priority foods are subject to significantly reduced labelling obligations. Businesses should therefore ensure that, should they wish to classify their product as a non-priority food, the product falls into one of the categories of non-priority foods identified in the Information Standard.