The Australian Competition and Consumer Commission (ACCC) has accepted an enforceable undertaking from supermarket giant Coles following an investigation into a video that was posted to various social media outlets between 7 February 2013 to 5 May 2013.
The video titled ‘Our Coles Brand Milk Story’ was published during a time of extensive public debate surrounding the impact of $1 milk on the dairy farmers of Australia, and stated that the farmgate milk price had increased to 90 cents when they had in fact decreased to 84 cents.
The ACCC states that Coles, who based the 90 cent figure on an August 2012 report containing an early estimate of the 2011-12 farmgate milk price, should have been aware of other reports that predicted that final industry figures would show a decrease in the farmgate milk price to 84 cents 2011-12.
Coles has admitted that its actions would be likely to have contravened section 18 of the Australian Consumer Law, (which prohibits misleading or deceptive conduct) and have agreed to publish corrective advertisements on the media platforms that the video was originally posted to.
“The ACCC is concerned to ensure that companies are applying the same degree of Australian Consumer Law compliance to representations made in social media versus other forms of advertising. For this reason, the ACCC considered it was important that Coles used social media to correct any misleading impressions formed by viewers,” said ACCC Chairman Rod Sims.
“The ACCC was concerned that Coles presented estimates and opinions as facts and that a number of representations made in the video and cartoon could not be substantiated by Coles,” Sims said.
In addition to the farmgate price, Coles also made representations that the average margin on Coles brand 2 litre milk had decreased from 55 cents in 2010-11 to 10 cents in 2011-12 and that processors received $1 per 2 litres of Coles brand milk – The ACCC say that these figures were unable to be substantiated.
Coles also made representations that the reduced price resulted in increased milk consumption and dairy production – a statement that the ACCC says is an implied connection and is an opinion rather than fact. The ACCC also said that such opinions “ignored the impact of other relevant factors on milk production.”
“Businesses should also be aware that even where a representation might seek to inform the public about a matter that is the subject of political debate, if it goes further and encourages or promotes the sale of a product or service, it must be compliant with the Australian Consumer Law,” Sims said.
The undertaking requires Coles to not make misleading or deceptive representations in relation to the impact of reductions in the retail price for Coles brand milk, on the farmgate milk price, Coles’ or processor margins on Coles brand milk, and/ or Australian milk production generally for a period of three years.
The supermarket must also identify specific compliance processes and training for employees of the Coles Media Relations Team to ensure the conduct of concern to the ACCC does not occur again.