ACCC v RL Adams Pty Ltd [2015] FCA 1016: Federal Court penalises Darling Downs Fresh Eggs for misleading conduct
Friday 18 September 2015 @ 9.00 a.m. | Trade & Commerce
The Federal Court, in orders declared on 14 September 2015, has stated that RL Adams Pty Ltd, trading as Darling Downs Fresh Eggs, engaged in misleading conduct and made misleading representations in its labelling and promotion of eggs as “free range”. The proceedings were initially brought by the Australian Competition and Consumer Commission (ACCC) and the court ordered that Darling Downs Fresh Eggs pay a pecuniary penalty of $250,000.
Background to the Case
Darling Downs Fresh Eggs is a Queensland egg supplier and sold eggs labelled as “free range” to consumers in QLD, the NT and NSW. Darling Downs Fresh Eggs represented that its egg supplies were free range under its own “Mountain Range” label and also under the “Drakes Home Brand Free Range” label. Darling Downs Fresh Eggs also supplied eggs it represented were free range to other producers who used them to supplement their own free range egg supply.
Allegations by the ACCC
The ACCC alleged, in its court submissions, that from 31 December 2013 to 6 October 2014, Darling Downs Fresh Eggs supplied eggs marketed and labelled as “free range” when in fact the laying hens had been continuously confined to barns and had never had access to the outdoors. Darling Downs Fresh Eggs admitted that this had been the case.
Action by the Court
According to the ACCC Media Release, the Court found that by labelling and promoting eggs as “free range”, Darling Downs Fresh Eggs represented to consumers that the eggs were produced by hens which were able to move about freely on an open range each day, and that most of the hens did in fact do so on most days. This was different in practice, as Darling Downs Fresh Eggs admitted, the doors to its barns were kept shut at all times so that none of the laying hens were able to access or use the outdoor range.
ACCC Chairman Rod Sims said:
“The issue of free range is very important to many consumers and the Australian Consumer Law [Sch 2 to the Competition and Consumer Act 2010] requires egg producers to make truthful, and not misleading, claims.
It’s clearly misleading to claim your eggs are free range when the hens that laid the eggs didn’t roam freely outdoors.
People are willing to pay a premium for free range eggs which they believe meet ethical or welfare standards. Businesses should not be benefitting financially from misleading claims about farming practices.”
In the judgment, Edelman J commented [at para 64] that RL Adams’ near-complete co-operation with the ACCC investigation, and its admission of responsibility, were significant mitigating factors in determining the appropriate level of penalty, and therefore ordered that Darling Downs Fresh Eggs implement a compliance program and publish corrective notices in major metropolitan newspapers and on its website, and contribute to the ACCC’s costs.
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Sources:
ACCC v RL Adams Pty Ltd [2015] FCA 1016 (11 September 2015)
Federal Court orders $250,000, penalty against Darling Downs Fresh Eggs for misleading
‘free range’ claims – ACCC Release MR 177/15
