Queensland Yoghurt Company Pty Ltd (QYC) has paid a penalty of $12,600 to the Australian Competition and Consumer Commission (ACCC) after the ACCC issued QYC with an infringement notice for allegedly misleading consumers about the ingredients contained in QYC’s yoghurt products.
Background
QYC is an Australian-owned supplier of yoghurt products sold under its own brand in Queensland and brands owned by independent state-based distributors. The ACCC alleged that from as early as 2 July 2019, QYC included CTF-1 as an ingredient in its yoghurts without disclosing it in their products’ statement of ingredients.
CTF-1 is a compound ingredient which contains gelatine. Gelatine is a translucent, colourless, flavourless food ingredient, derived from the collagen of animal parts. It is commonly used as a gelling agent in food, including yoghurt. While gelatine can add to the creamy consistency of yoghurt, its inclusion as an ingredient may make such yoghurt products unsuitable for vegetarians.
Labelling requirements
Food manufacturers must comply with the Australian Consumer Law, the Australia and New Zealand Food Standards Code (Food Standards Code) and the relevant state legislation which requires labels to provide accurate information regarding a product’s ingredients. The standards in the Food Standards Code are legislative instruments under the Legislation Act 2003.
Food Standards Code
Standard 1.2.4 of the Food Standards Code requires foods for sale to list a statement of ingredients.1 As a compound ingredient, products that include CTF-1 are required by the Food Standards Code to include CTF-1 and then list the ingredients of the CTF-1 in brackets after the name of the compound ingredient. Alternatively the supplier may declare all of the ingredients of the compound ingredient separately as if they were individual ingredients of the final food.
Australian Consumer Law
According to the ACCC’s press release dated 15 May 20202 , the ACCC claimed that it had reasonable grounds to believe that by omitting gelatine (or CFT-1) from its ingredient list, QYC’s statement of ingredients was false or misleading, in contravention of the Australian Consumer Law.
Section 29(1)(a) of the Australian Consumer Law states that a person, including corporations, must not, in trade or commerce, make false or misleading representations that goods are of a particular standard, quality, value, grade composition, style or model or have a particular history or particular use.
According to ACCC Commissioner Sarah Court, “QYC’s failure to disclose gelatine means consumers may have purchased its yoghurt products believing they did not contain gelatine,” Ms Court went on to say that “this may be of particular concern to consumers who have chosen not to consume gelatine for dietary, religious, environmental or ethical reasons.”3
QYC is not the first company to be subject to scrutiny by the ACCC for alleged misleading food labelling. In 2003 The Outback Juice Company was prosecuted by the ACCC, under the then Trade Practices Act 1974, for failing to disclose sugar in its product labelling.4 The Outback Juice Company’s labels stated products were ‘100% fresh Orange Juice’ when testing in fact showed the products were not. The Outback Juice Company agreed to remedy its labelling and create its own compliance program.
QYC has agreed to amend its product statement by the end of May 2020.
The ACCC has noted in its press release that the payment of a penalty specified in an infringement notice is not an admission of a contravention of the Australian Consumer Law. Under section 134A of the Competition and Consumer Act 2010 (Cth) (CCA), the ACCC has the power to issue an infringement notice when it has reasonable grounds to believe a person or business has contravened certain consumer laws (section 29 is one of the sections to which section 134(A) of the CCA applies).5
What does this mean for you?
The ACCC has highlighted misleading representations relating to food as an enforcement priority area for 2020.6 The infringement notice issued by the ACCC on QYC serves as a warning to food manufacturers to ensure strict adherence to the Food Standards Code, the Australian Consumer Law and related legal obligations.
If you require any information about how labelling requirements under the Food Standards Code or Australian Consumer law apply to you, please contact us.
This article is written by Teresa Torcasio, Partner and Chantelle Radwan, solicitor.
1. Australia New Zealand Food Standards Code, Standard 1.2.4.
3. Ibid.
4. See ACCC statement at https://www.accc.gov.au/public-registers/undertakings-registers/s87b-undertakings-register/outback-juice-company-s87b-undertaking
5. Section 134A(2)(b), Competition and Consumer Act 2010 (Cth).
