Heinz to Pay $2.25 Million in Penalties for Misleading Nutritional Marketing

Monday 27 August 2018 @ 2.38 p.m. | Legal Research | Trade & Commerce

H.J. Heinz Company Australia Ltd (‘Heinz’) has been ordered to pay a $2.25 million penalty in the case of Australian Competition and Consumer Commission v H.J. Heinz Company Australia Limited (No 2) [2018] FCA 1286. Alongside the penalty, Heinz was also ordered to establish a Consumer Protection Law Compliance program for misleading the public about the nutritional content of one of its products for toddlers.

Background to the Case

In June 2016, the Australian Competition and Consumer Commission (ACCC) commenced proceedings against Heinz, alleging that Heinz made false and misleading representations in relation to its line of Little Kidz Shredz products. In particular the ACCC alleged that the images and statements in the advertising and promotional material for these products claimed that the products were of equivalent nutritional value to fruits and vegetables, and were a healthy food for children aged from one to three years. The products’ packaging included images of fresh fruits and vegetables and featured statements relating to the nutritional content of the products. 

In March 2018, the Federal Court found that the packaging of the Little Kidz Shredz product made false and misleading statements in the case of ACCC v H.J. Heinz Company Australia Ltd [2018] FCA 360. For more information, please read TimeBase’s earlier article.

Decision of the Federal Court

Justice White, sitting alone, made the following orders:

  • That Heinz pays the Commonwealth $2.25 million within 30 days;
  • That Heinz establishes a Consumer Protection Law Compliance Program within 3 months;
  • That Heinz maintains that Consumer Protection Law Compliance Program for three years from the date on which it is established;
  • That Heinz pay the ACCC’s costs for the process on a party and party basis.

Justice White made the following comment on the misleading nature of the products:

[12] ‘It comprised the making of a representation on the packet of each Product that the Product was beneficial to the health of children when, by reason of the high sugar content and sticky texture of the Products, that was not the case. The evidence showed that the Products were marketed to the parents and carers of toddlers. Heinz’s conduct had the potential to mislead those persons about the health benefits of the Products.’

Justice White further noted the importance of considering the serious and extensive nature of the contraventions as well as the need for deterrence in relation to the penalties imposed:

[75] ‘I consider that the aggregate of the penalties to be imposed on Heinz should be much more than the figure of $400,000 for which it contended. That is necessary, in particular, because of the serious and extensive nature of the contraventions, their effects and the need for deterrence, both specific and general. It would not be appropriate to fix the aggregate of penalties at an amount which does no more than negate the profit Heinz derived from the sale of the Products. That would not reflect the purposes for which the penalties are imposed.’

Response to Decision

In a media release issued by the ACCC, Chairman Rod Sims stated:

‘The Heinz Group is one of the largest food companies in the world. We will continue to advocate for stronger penalties to deter large companies from engaging in serious contraventions of Australia’s consumer laws, particularly now that Parliament has passed legislation substantially increasing the maximum penalties for breaches of the ACL.’

The media release indicated that the ACCC is considering the judgement.

ABC News reported Heinz managing director Bruno Lino as saying that Heinz respected the decision made.

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Australian Competition and Consumer Commission v H.J. Heinz Company Australia Limited (No 2) [2018] FCA 1286.

[media release]Australian Competition and Consumer Commission (ACCC) ‘Heinz ordered to pay $2.25 million penalty over misleading health claim,’ 24 August 2018.

Rebecca Opie, ‘Heinz to pay $2.25m for 'misleading and deceptive' marketing of sugar-heavy food,’ ABC News, 24 August 2018.

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