The Australian Consumer Law was designed to promote fair trading and provide for consumer protection in business and commerce.
It is also responsible for the regulation of food product labelling and creates a system of transparency to protect producers and consumers alike, under the “Country of Origin Representations” which provide exceptions to the misleading or deceptive conduct provisions.
Misleading or deceptive conduct under the Australian Consumer Law
Section 18 provides that “a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.
Section 29 provides for more specific instances of misleading or deceptive conduct, relating to country of origin representations. Section 29(1) provides:
“a person must not, in trade or commerce, in connection with a supply or possible supply of goods or services or in connection with the promotion by any means of the supply of goods or services:
- make a false or misleading representation that goods of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use”.
- make a false or misleading representation concerning the place or origin of goods”.
The country of origin ‘defence’
Part 5-3 provides a series of exceptions to what would otherwise be misleading or deceptive conduct.
Under Section 255 if a product carries the label “Made in Australia” then, that representation as to the country of origin of the goods is not misleading or deceptive if:
- the goods have been substantially transformed in that country; and
- 50% or more of the total cost of producing or manufacturing the goods as worked out under section 256 of the Australian Consumer Law is attributable to production or manufacturing processes that occurred in that country.
(Section 256 provides the formula to determine whether 50% or more of the total cost of producing or manufacturing the goods occurred in that country).
The current “Made in Australia” label therefore permits goods that have been sourced internationally and significantly altered, to be branded as ‘Australian’. As long as 50% or more of the total cost of that substantial transformation is attributable to the production within Australia, products may carry the “Australian Made” label. For example, Canadian pork smoked and packed in Australia to produce bacon may be labelled “Made in Australia” without being misleading or deceptive.
Where to now? Proposed legislation changes
In 2012, the Competition and Consumer Amendment (Australian Food Labelling) Bill 2012 was put before Parliament to amend the current exceptions under Part 5-3 of the Australian Consumer Law.
The key proposals included:
- Setting up a particular set of labeling requirements for food (noting the current legislation applies to all “goods”);
- Abolishing the terms “made in…” and “product of …”;
- Requiring packaged food in which 90% or more of the total weight (excluding water) is comprised of ingredients or components that were grown in Australia, be labelled, “made of Australian ingredients”;
- Prohibiting packaged food in which less than 90% of the total weight (excluding water) is comprised of ingredients or components that were grown in Australia, from being labelled “made of Australian ingredients”;
- Requiring regulated fresh food (which is separately defined) displayed for retail sale other than in a package, to identify the country in which the food was grown, or indicate that the food is local food, imported food or a mix of local and imported food, as the case may be;
- Food, or an ingredient or component of food, is grown in a country if the food, ingredient or component:
- is materially increased in size or materially altered in substance in the country by natural development; or
- germinated or otherwise arose in, or issued in, the country; or
- is harvested, extracted or otherwise derived from an organism that has been materially increased in size, or materially altered in substance, in the country by natural development.
The proposed Bill was ultimately rejected by the Senate. It was considered that a more stringent definition of “substantially transformed” was required (either directly within the Act or allowed for under regulations).
Accordingly on 16 May 2013, Senator Christine Milne put forward theCompetition and Consumer Amendment (Australian Country of Origin Food Labelling) Bill 2013, which makes significant amendments to the original Bill, and takes into account many of the recommendations put forward in the initial Senate inquiry.
The Bill proposes a three tier standard of labelling for food:
- “Product of Australia” – wholly manufactured or processed in Australia, and all the significant ingredients are grown in Australia;
- “Manufactured in Australia” – substantially transformed in Australia and at least 50% of the total cost of processing incurred in Australia; and
- “Packaged in Australia” – processed in Australia.
There is particular emphasis on unpackaged goods such as fruit and vegetables which must be labeled with either “Grown in Australia”, “Product of Australia” or “Produce of Australia”. Similarly, unpackaged food that is grown outside Australia must be labeled with the country of origin or indicate that it is local food, imported food or a mix of local and imported food.
Currently the Bill remains before the Senate for consideration.
The country of origin laws can be (and regularly are) used to a producer’s advantage. There are many products labelled in a way which is strictly legal but where the true position would surprise many consumers. On the other hand, genuinely local producers can do more under the existing laws to distinguish themselves from those producers that need to rely on legal technicalities to justify their description.
Kott Gunning is experienced in rural business and has a dedicated consumer law team. For further information on product labelling or any other issue affecting your business, please contact Tom Darbyshire or Emma Leys on (08) 9321 3755.
The information published on this website is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.