Paying the price for grape claims: ACCC pursues misleading claims

The ACCC recently indicted food and agribusiness companies for making misleading statements, for failing to comply with the Horticultural Code of Conduct and for issues of unfair terms in standard contracts. Last month, the ACCC issued notices of violation to Victorian table grape dealers Grape Co for making false or misleading claims about the origin of their grapes and for failing to adhere to the Code of Conduct. horticulture.

This alert explains the monitoring of food companies. It is important to note that you must carefully justify your claims on websites and make sure you follow the mandatory codes that apply to the horticultural and dairy industries.

Grape Co is located in the Sunraysia region of Victoria and supplies grapes to national and international markets (including select supermarkets in Australia) under the Grape Co. label.

Deceptive and deceptive conduct

Under Section 29 of the Australian Consumer Law, businesses cannot make false or misleading statements about the place of origin of their goods. The ACCC may issue a Notice of Violation to a business where it has reasonable grounds to believe that it has violated certain consumer protection provisions of Australia’s Consumer Law or a civil sanction provision of a code. industry (for example, the horticultural code discussed below).

Grape Co’s claim challenged by ACCC was posted on the Grape Co Australia website and stated that “Each of our grapes are personally hand-picked from the finest fruit from the family estate at Sunraysia Australia”. The ACCC ruled that this claim meant that all Grape Co Australia brand grapes are grown on the Grape Co Australia family estate, when in fact some of these grapes are grown on the properties of third-party producers.

As a result of its investigation, the ACCC issued an infringement notice to Grape Co Australia for allegedly making false and misleading statements on its website regarding the origin of the grapes sold. Grape Co Australia paid a fine of $ 13,320 and has since modified its website to more accurately reflect the origin of the grapes marketed to consumers.

ACCC Vice President Mick Keogh stressed that food producers must ensure that they do not mislead consumers with marketing claims about the place of origin of goods or products. These statements not only impact consumers, but can also prevent other businesses concerned with being precise in their marketing from competing on a level playing field. It is important to note that consumers seeking to support small businesses may make their decision to purchase products based on claims that the products come from a family farm, and it is essential that consumers are not misled so they get their money’s worth.

Infringements of the Horticultural Code

The Horticultural Code is a mandatory sector code under the Competition and Consumption Act which aims to improve the clarity and transparency of trade agreements between growers and traders in the horticultural sector. The Code sets out the minimum requirements that agents and traders must meet in their dealings with fruit and vegetable producers. The ACCC has made the application of the Horticultural Code one of its priorities for 2021.

Under the Horticultural Code, traders are required to prepare and publish their trading conditions and make them available to the public. The Horticultural Code also requires that growers and wholesalers have a written agreement that meets the requirements of the horticultural code in place in order to market horticultural products, which include unprocessed fruits, vegetables (including mushrooms and other edible fungi. ), nuts, herbs and other edible plants, but excludes nursery products.

The ACCC alleged that Grape Co Farms was trading without having entered into any written agreements on horticultural products when it was acting as an agent of the winegrowers and when it failed to prepare, publish and make public a document stating its commercial terms.

Grape Co Farms paid $ 21,600 in penalties under the two notices of violation issued to them by the ACCC. In addition to paying these penalties, Grape Co Farms has agreed to amend a number of clauses in its standard agreements that the ACCC considers likely to be unfair contract terms (which is a scheme that protects small businesses against unfair terms in “Take it or leave it” style contracts). These included terms that gave Grape Co Farms the ability to unilaterally change the agreement or unilaterally terminate the agreement on short notice, and the ability to withhold partial payments.

Key points to remember

  1. Examine your website: A common problem with consumer food and grocery businesses is that claims on packaging are carefully vetted with the proper approvals in place, but claims on websites are often less vetted. Claims of “romantic copying” may be made and added to websites or other social media platforms on behalf of the company by marketing teams or external agencies who may not be aware of their obligations in under Australian Consumer Law with respect to deceptive and deceptive behavior and false or misleading claims regarding goods or services. The recent ACCC case in Kimberly Clark’s Federal Court over the “made in Australia” claims made on its website further reinforces the importance of the claims on websites and the fact that companies have to lend so much money. Pay attention to claims they make on their websites and online content than to their claims on packaging.

  2. Check the code: Traders should ensure they have written agreements in place with growers that include the issues set out in the Horticultural Code of Conduct (eg, how the price is calculated and when growers will be paid). The ACCC stressed that it is important that both parties clearly understand their rights and obligations under these agreements, as well as the services and aspects of trade provided by different traders. This allows producers to make informed decisions to whom they wish to supply their products to. The Code applies to producers and traders (who can be either a trader or an agent) and does not apply to buyers of horticultural products who sell directly to consumers.


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