CUB fined $20k for misleading labelling

Carlton & United Breweries (CUB) has paid two infringement notices totalling more than $20,000 for misleading labelling which implied one of its beers was brewed by a craft brewer in Byron Bay.

The labelling of the Byron Bay Pale Lager product incorporated the name Byron Bay Pale Lager as well as a pictorial representation of a lighthouse, text regarding Byron Bay and a map of the Byron Bay region showing the location of the Byron Bay Brewing Company.

The Byron Bay Brewing Company is a small brewery that, via its parent, licensed to CUB the right to supply Byron Bay Pale Lager across Australia. However the brewery only brews the Lager for sale on tap at its site in Byron Bay. The bottled beer is brewed by CUB at its brewery in Warnervale, some 630km away from Byron Bay.

ACCC chairman Rod Sims said CUB’s conduct undermines craft brewery’s point of difference. “Many small brewers cater to consumers who prefer to support small, niche businesses. When large companies portray themselves as small businesses, it undermines the unique selling point that such small businesses depend upon, and it misleads consumers,” he said.

“The ACCC will be writing to other participants putting them on notice of this matter in order to ensure that marketing and labelling in the beer market appropriately reflects where and by whom beer is brewed.”

In providing the court enforceable undertaking, CUB acknowledged that the labelling may have misled consumers and agreed to cease distribution of product with the misleading labelling. CUB has also said that, moving forward, it will not make false or misleading representations concerning the scale of the brewery in which its products are brewed or the place of origin of its products.

Coles gives undertaking to ACCC in relation to milk price video

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.


Industry and government unsure about ACCC price setting powers

The federal government, the Greens and the National Farmers Federation are all unsure that giving the Australian Competition and Consumer Commission (ACCC) the power to set farm gate prices is the best solution to unsustainable discounting.

Last week it was announced that Coles and Woolworths will transfer the discounts they’re no longer allowed to apply to petrol to grocery items, and while discounting can help both the consumer and producers with excess produce, chairman of the ACCC Rod Sims says it’s important that supply contracts are honoured and that discounts don’t last so long that they damage other retailers.

According to the ABC, the National Farmers’ Federation voiced similar concerns, arguing that long term discounts can hurt food producers.

"While cheaper prices for consumers are important when mums and dads are balancing their budgets, I'm sure they'd all like to see that they can continue to buy Australian food into the future. And if that's to be the case, then we need to have a system in place to make sure that both farmers and food processors can survive as well,” Matt Linnegar, chief executive of the National Farmers' Federation, said.

Providing the ACCC with the power to set the farm gate prices isn’t necessarily the best option, Linnegar added.

"When it comes to the powers of the ACCC, and whether it's the ACCC or some other body or ombudsman, what we need to ensure is that the activities of those in the supply chain are [not] going to have a detrimental impact on others in the supply chain, that needs to be addressed in some way.

"I'm not sure whether giving the ACCC the power to set prices is the answer. I think you'd need to have a long, hard look at that before you went down that path,” he said.

Small Business Minister Bruce Billson, agrees, and says the government has set up the root and branch review of competition law to look at pricing issues. There is also existing legislation in place to prevent predatory pricing.

"There are constraints on the extent of, and the way, discounting can be implemented, that guard against predatory pricing where discounting is used to wipe out competitors," he said.


Murray Goulburn to lobby competition regulators over WCB approval timelines

Gary Helou, chief executive of Victorian dairy co-operative, Murray Goulburn said that the business intends to lobby government and regulators over competition issues relating to the sale of Warrnambool Cheese and Butter.

Helou believes that the competitive landscape was not level in relation to time alignments, and added that analysts and commentators are now considering the formation of an alignment in the Australian dairy and competition framework to encourage a even playing field, The Weekly Times Now reports.

Murray Goulburn first entered a bid to take over WCB back in 2010, but pulled out before the final ruling by the competition regulator, the Australian Competition and Consumer Commission.

Murray Goulburn’s takeover offer was heard on November 29 last year with an estimated ruling expected at the end of February, however Saputo received Foreign Investment Review Board approval back on November 12.

The cooperative has since sold its stake in WCB to Saputo, pushing the Canadian dairy processor’s share in the company up to 77 percent.

"We will certainly be talking to the regulator and the regulators to make sure the time lines align and not disadvantage any bidder," Helou said.

"We believe strongly in a level playing field and that is all we are asking for.

"We will be seeking to constructively engage with our government and the regulators to relook at the regulation and hopefully draft a better time line alignment."

Saputo now holds a majority share in Warrnambool Cheese and Butter following the acquisition of MG’s shares which has raised WCB’s share price up to $9.40 per share.

Should Saputo’s stake in Warrnambool hit over 90 percent, then the share price could potentially reach $9.60 per share, however the likelihood of this occurring is relatively slim as Lion, a 10 percent shareholder recently released a statement confirming that it has “no current intention to accept Saputo’s takeover offer.”   


Olive oil importers lodge ACCC complaint over ‘misleading’ AOA claims

The industry body representing olive oil importers, the Australian Olive Oil Association (AOOA) has lodged a complaint with the ACCC, stating that a new advertising campaign from the Australian Olive Association (AOA) is promoting ‘misleading information’ on imported oil.

The campaign, which features dietician Dr Joanna McMillan states that Australian olive oil is “fresher, tastier and better for you” – a claim that the AOOA alleges is misleading and has no factual basis. The association also claims that nine out of 10 olive oils tested by the body failed to meet Australian standards.

The AOOA, which represents a significant number of olive oil importers as well as some local growers say that the advertising campaign is ‘actively promoting against’ imported olive oils and that the association is using ‘scare tactics’ to promote its agenda.

AOOA president David Valmorbida, says that the campaign is doing the industry a disservice.

"We feel that there are a number of inaccuracies in the campaign that has been launched by the AOA, which are significantly misleading to consumers and ultimately and not in the best interests of the industry," says Valmorbida.

"They have been involved in active promotion against imported olive oils for some time now. But we do take issue when incorrect information is passed on to consumers because it is not in their best interests.

"Certainly what we don't want is for consumers to turn around and think that there is something wrong with olive oil and the olive oil category and begin reverting their choice to other types of cooking oils which may be less healthy for them.”

Lisa Rowntree, CEO of the AOA said it had comprehensive evidence to support its claims.

"Of course importers are going to try to defend their position, but at the end of the day they know we are right. Embarrassingly for them, most of the oils we tested not only failed the Australian standards but also their own IOC standard," she said.

"This is such a big problem worldwide that the EU has openly admitted that olive oil is their No. 1 issue. Our Australian standard is a robust document that was approved by all the stakeholders, including the importer representatives at that time.

"In fact our Australian standards are now been evaluated and discussed by European authorities to incorporate them in their legislation to fight against the widespread adulteration issue."

Game Farm fined $20,400 over false ‘range reared’ claims

Multi-species game bird producer, Game Farm, has paid two infringement notices totalling $20,400 and has provided a court enforceable undertaking to the Australian Competition and Consumer Commission.

The penalties relate to claims on Game Farm’s packaging and website stating that its birds are ‘range reared’, which in fact they were grown in commercial sheds and had no access to the outdoors.

The ACCC considered that the ‘range reared’ representation was likely to lead consumers to believe that birds were allowed to spend a substantial amount of their time outdoors on an open range.

“The ACCC continues to warn the poultry industry that claims made on packaging and in advertising must be true and accurate and not mislead consumers,” ACCC chairman, Rod Sims, said.

The ACCC issues two $10,200 infringement notices to Game Farm, which supplies quail, spitchcock, duck, chicken and turkey to supermarket chains, wholesalers, restaurants, hotels and specialty butchers. The first infringement was for the ‘range reared’ representations on the packaging of Game Farm’s Gourmet Quail product, and the second was for the ‘range reared’ representation on its website.

As part of the court enforceable undertaking, Game Farm will send a corrective notice to its major customers and will establish and implement a trade practices compliance program to ensure this type of conduct does not occur again.

The ACCC has cracked down on credence claims this year, with a number of other companies receiving similar penalties. Earlier this month Luv-a-Duck was ordered to pay $360,000 for also making false representations about how its ducks are reared, and at the end of October, Baiada Poultry and Bartter Enterprises, the suppliers and processors of Steggles chicken products, has fined $400,000 over misleading ‘free to roam’ claims. Pepe’s Ducks had to pay a similar amount in January and was ordered not to use the phrases ‘open range’ or ‘grown nature’s way’ on its packaging or marketing material for the next three years.


Toughen up: what Australia’s supermarket code could learn from the UK

The new draft voluntary code of conduct between supermarket giants Coles and Woolworths and their suppliers has so far elicited responses ranging from cynicism to cautious optimism.

Supporters point out the code will act as a useful adjunct to the existing statutory framework and provides transparency and certainty.

But critics describe it as intended to dilute political concerns around the misuse of market power and unconscionable conduct by supermarkets, heading off any attempt to introduce more draconian remedial measures such as market capping and divestiture – while not altering the underlying economics of lop-sided supermarket-supplier relations.

Other points out that the code fails to address concerns around major supermarkets’ leveraging their power into other sectors such as liquor, fuel and financial services. It is also unlikely to strengthen the bargaining position of primary producers, many of whom do not deal directly with the supermarkets.

And as a comparison with the UK experience shows, there are significant limitations on the Australian code’s likely effectiveness, not least of which is the absence of penalties for its breach.

The UK approach

Non-compliance with the Australian code could lead ultimately to declarations, injunctions, damages and a range of remedial orders requiring contractual terms to be changed and payments to be refunded. But a serious weakness of the statutory scheme underpinning the Australian code is its failure to provide financial sanctions for breaches.

The UK introduced a much tougher groceries supply code earlier this year, administered by independent Groceries Code Adjudicator, Christine Tacon, whose position is funded by a levy on the largest supermarkets.

Tacon, who participated in a major public symposium on supermarket power held by the University of Melbourne and Monash University in August, has wide-ranging investigatory and enforcement powers, backed by the threat of substantial sanctions.

Consequences for breach of the code include a maximum penalty of 1% of UK turnover from the retailer. This would equate to a maximum financial penalty ranging from £10 million to £500 million (based on 2012 annual accounts) depending on the UK turnover of the retailer concerned. What’s more, where the code is found to have been breached, the costs of investigation can be recovered from the retailer.

Tacon also has the power to “name and shame” by requiring a retailer publish information about an investigation. This tool alone may be sufficient to achieve suitable outcomes without having to impose financial penalties. Tacon has said she regards penalties as “the last resort”.

Importantly too, Tacon – well-known in the food production and retail sectors – aims to build trust between her office and the industry and amongst industry participants themselves. This will be critical in ultimately in changing unconscionable behaviour.

Early reports have been positive. Tacon says that there has already been a change in behaviour by the retailers with suppliers indicating that they are enjoying greater flexibility over where they source packaging, while reasons for delisting products are being set out more clearly, with reasonable notice being given.

Pale by comparison

All this makes Australia’s efforts seem rather pale. Australia’s proposed code has no dedicated independent agency tasked with educating the sector or providing guidance on the code’s interpretation (such as the meaning of dealing in “good faith”), monitoring and reporting on compliance and mediating or arbitrating disputes.

While some of these roles will be played by the ACCC, the code appears to envisage that educative and monitoring functions will be performed primarily by a committee of an industry roundtable.

All of the dispute resolution processes are to be conducted privately or with a mediator/arbitrator appointed by the parties. The ACCC becomes involved only where those processes are unsuccessful or there is a unilateral complaint to the Commission about breach of the code.

The voluntary code is not intended as a substitute for the laws dealing with anti-competitive acquisitions, misuse of substantial market power and unconscionable conduct, which will continue to be monitored by the Australian Competition and Consumer Commission (ACCC).

The ACCC continues to investigate potential market power misuse and unconscionable conduct by the supermarkets, with an outcome expected next year.

No doubt the verdict of the ACCC’s investigation will influence the government’s forthcoming review of competition law, which will examine the effectiveness of the existing legal prohibitions and remedies.

But whether or not the Australian code succeeds in repairing the broken trust between suppliers and the major supermarkets in this country remains very much to be seen. Failure to emulate some of the strengths of the UK system makes it hard to shrug off the scepticism that justifiably accompanies most attempts at self-regulation.

More teeth needed?

It may also explain in part why groups such as the National Farmers’ Federation withdrew from the code negotiating table and why their Victorian counterpart has dismissed the code as “pure spin”; whereas in the UK the new adjudicative scheme enjoys widespread support including from the National Farmers Union.

Applying penalties will require an amendment to the provisions of the Competition and Consumer Act 2010 that governs codes of conduct. Similarly, legislation would be required to establish an independent adjudicator, either as part of or separate from the ACCC.

Minister for Small Business Bruce Billson, who is overseeing the government’s competition law review, has said that if the current code proves ineffective then steps will be taken to give it more “teeth”. However, waiting for the (arguably) inevitable failure of the code before introducing more stringent measures does not seem sensible policy. Nor is it likely to engender confidence amongst suppliers who have been crying out for government to take robust action in relation to supermarket power and behaviour for years.

If anything, the “wait and see” strategy will only reinforce the perception that the supermarkets wield as much political power as they do market power.

Caron Beaton-Wells was the co-convenor of a major public symposium on supermarket power, held by the University of Melbourne and Monash University, in August 2013.

The Conversation

This article was originally published at The Conversation. Read the original article.


WCB battle and farmer ownership: dairy at a crossroads

The share price of Victorian dairy processor Warrnambool Cheese and Butter (WCB) has more than doubled over recent weeks in response to a takeover tussle between Australian publicly listed company Bega, Canada’s publicly listed Saputo and Australian cooperative Murray Goulburn (MG).

MG is Australia’s largest milk processor. Its 2,400 farmer-shareholders produce a third of Australia’s milk which is sold in domestic and export markets. Devondale is its main retail brand.

A vote of confidence in the Australian dairy industry

Saputo is one of the world’s ten largest dairy manufacturers. It trumped Bega’s initial offer for WCB, and then raised its bid to trump MG when it entered the fray. Saputo clearly thinks there is money to be made producing dairy products in Australia.

The key ingredients according to chief executive Lino Saputo Jnr are a cost-competitive and reliable supply base (that’s the dairy farmers), and proximity to growing and profitable Asian markets. Saputo’s interest can be taken as a vindication of Australian politicians' views that Australia is well placed to benefit from an impending “dining boom”.

But what about the farmers?

Up until the recent takeover activity the main news coming out of the south-west Victorian dairy industry was of crisis. A depressed milk price and challenging seasonal conditions pushed some farmers to the wall. Are these stories connected? Does corporate confidence signal better times ahead for farmers?

One dairy farmer with strong views on this is Roma Britnell, from Woolsthorpe, 25km north of Warrnambool. As well as being a director of a family-owned company that milks 1,000 cows across three farms, Roma is also involved in the wider industry through her roles as a United Dairy Farmers of Victoria regional policy councillor, and Australian Dairy Farmers national councillor. She is also a former Victorian Rural Woman of the Year.

Time for Australian farmers to understand the benefits of cooperation

Based on her 2010 world tour as a Nuffield Farm Scholar Roma is convinced there is an opportunity for Australian agriculture to benefit from rising global food demand. But the benefits won’t necessarily flow to farmers:

“Having ownership post farm gate is imperative to farmers' ability to influence the price they receive and therefore their future business sustainability. We don’t and can’t influence the international milk price. However, ownership of the product further along the supply chain by farmers does determine how much of the profit (and losses) stay with us.”

Roma is a Murray Goulburn supplier-shareholder, and a passionate believer in cooperative principles: “Without an efficient farmer-owned model to sell through we would be at a significant disadvantage. It seems in Australia we are not listening. Everywhere else I went this was considered a no brainer.”

Global competition more important than local competition

Murray Goulburn previously attempted a takeover of WCB in 2010, but withdrew after receiving advice from the Australian Competition and Consumer Commission (ACCC) that it was concerned about reducing competition in the milk processing industry. Roma argues this is the wrong focus: “It’s the ability of the Australian dairy industry to compete globally that is the main game for farmers, and to win that game we need a larger farmer-owned processor.”

This time around Murray Goulburn is attempting to bypass the ACCC by making an application to the Australian Competition Tribunal for authorisation of the merger on national interest grounds, and has suggested that the Foreign Investment Review Board shouldn’t make a ruling on Saputo’s offer until Murray Goulburn’s application has been considered.

Cooperate or perish?

Tim Mazzarol has argued that, facing global competition and a powerful retail sector, farmers have only three options to strengthen their position: “get larger, find niches or cooperate.”

For Roma Britnell a merger between WCB and Murray Goulburn is an opportunity that may never come again to strengthen farmer cooperation in the dairy industry: “There are lots of variations of the cooperative model around the world so, if the current one isn’t to the liking of our community of farmers, we can change that. But if we lose control it’s going to be very hard, if not impossible, to regain it.”

Not all dairy farmers support the cooperative model, and not all are fans of Murray Goulburn. But MG CEO Gary Helou is convinced the cooperative needs to grow for it, and the Australian dairy industry, to thrive. If he’s right then the WCB battle, which still has a long way to run, may indeed be a crossroads for the industry.

Michael Santhanam-Martin does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

This article was originally published at The Conversation. Read the original article.


Luv-a-Duck to pay $360,000 over misleading claims

Duck meat supplier, Luv-a-Duck, has been ordered to pay $360,000 by the Federal Court for making false representations on its packaging and in marketing material.

The Federal Court has ordered that Luv-a-Duck, a large supplier of duck meat products with a market share of about 40 percent, pay $360,000 in civil pecuniary penalties following action by the Australian Competition and Consumer Commission. The company must also pay $15,000 towards the ACCC's costs.

The court found that Luv-a-Duck had engaged in misleading or deceptive conduct (or conduct likely to mislead or deceive) and made false representations by using words on its packaging, website, brochures and in a promotion for the Good Food & Wine Show in Adelaide in 2012, that its ducks were:

  • ‘grown and grain fed in the spacious Victorian Wimmera Wheatlands’; and/or
  • ‘range reared and grain fed’ (which mainly appeared as a logo).

The ACCC argued that these descriptions suggested Luv-a-Duck's products were from ducks that spent at least a substantial amount of time outdoors, were raised in a spacious outside environment and were of a different quality than duck meat products processed from barn-raised ducks.

In actual fact, Luv-a-Duck's ducks didn't spent any time outside their barn.

"This penalty is a further warning to the poultry industry and businesses generally that consumers are entitled to trust that what is said on product packaging and other promotional product material is true and accurate," said ACCC Commissioner Sarah Court said.

"Traders who abuse the trust of Australian consumers may also find themselves exposed to similar enforcement action."

Credence claims, particularly in the food and beverage manufacturing industry, have been a point of focus for the ACCC this year.

Just last week, Baiada Poultry and Bartter Enterprises, the suppliers and processors of Steggles chicken products were ordered to pay $400,000 in penalties over misleading 'free to roam' claims.

Water brands making 'organic' claims were also directed by the ACCC to remove such claims from their bottled water products.

Deputy chairwoman for the ACCC, Delia Rickard, said "Organic standards acknowledge that water cannot be organic. Any claim that particular water is organic would therefore be misleading or deceptive."


Fonterra acquires six percent share of Bega

Dairy giant, Fonterra, has acquired a six percent share of Bega Cheese Limited – one of the three companies in a bidding war for another dairy company, Warrnambool Cheese and Butter.

The 9.3 million shares were purchased at $4.95 per share for a total $46 million.

Fonterra chief executive, Theo Spierings said, "Australia is an important market for Fonterra, and we are committed to growing our already strong presence.

"There has recently been a lot of consolidation activity in the Australian dairy industry. It is important that Fonterra participates, and we have confidence in Bega and the strategy it is pursuing."

Judith Swales, managing director, Fonterra Australia said, "We have a longstanding partnership with Bega, and we look forward to continuing to build on that relationship into the future.” Fonterra currently licenses the Bega brand from Bega and has a substantial supply contract for cheese."

There has been a lot of activity in Australia's dairy industry in recent times, with  Bega, Murray Goulburn and Canadian processor Saputo all in the running to acquire Warrnambool Cheese and Butter, and earlier this week a 9.99 percent stake of Warrnambool was bought by the Australian subsidiary of Japanese food giant, Kirin.

Yesterday, the Australian Competition and Consumer Commission announced that it won't oppose Bega's proposed acquisition of Warnambool.

"The ACCC considered that there was limited overlap between Bega and Warrnambool Cheese and Butter in relation to the acquisition of raw milk in the dairy region in south west Victoria (and areas of northern Victoria)," ACCC chairman Rod Sims said.

"The ACCC concluded that a merged Bega and Warrnambool Cheese and Butter would continue to  be constrained by other dairy manufacturers that they compete more closely with in the acquisition of raw milk, including Murray Goulburn and Fonterra."


ACCC gives Bega’s Warrnambool bid the all-clear

The Australian Competition and Consumer Commission (ACCC) has released a statement confirming that it won't oppose Bega Cheese's proposed acquisition of Warrnambool Cheese and Butter.

Bega and Warrnambool Cheese and Butter each operate dairy manufacturing plants that produce a range of processed dairy products and compete for the acquisition of raw milk from dairy farmers.

But this competition isn't significant enough to road-block the proposed acquisition, according to the ACCC.

"The ACCC considered that there was limited overlap between Bega and Warrnambool Cheese and Butter in relation to the acquisition of raw milk in the dairy region in south west Victoria (and areas of northern Victoria),” ACCC Chairman Rod Sims said.

“The ACCC concluded that a merged Bega and Warrnambool Cheese and Butter would continue to  be constrained by other dairy manufacturers that they compete more closely with in the acquisition of raw milk, including Murray Goulburn and Fonterra.

"Murray Goulburn and Fonterra are also the largest suppliers of each of the processed dairy products supplied by Bega and Warrnambool Cheese and Butter, and would be likely to competitively constrain the parties, in the event that they merge, in the future," Sims said. 

The ACCC recognised that many dairy manufacturers in Australia currently export significant quantities of the relevant dairy products supplied by Bega and Warrnambool Cheese and Butter and would be able to redirect exports into the domestic market to increase supply in Australia. 

The ACCC considered that in addition to competition from domestic dairy manufacturers, imports are also likely to exert a degree of competitive pressure in the wholesale supply of the dairy products supplied by Bega and Warrnambool Cheese and Butter.

Warrnambool is currently the subject of a bidding war between Bega, Murray Goulburn and Canadian processor Saputo, and earlier this week a 9.99 percent stake of the company was bought by the Australian subsidiary of Japanese food giant, Kirin.


Baiada underpayment claims are “bullshit”, says labour company

Workers at Baiada's chicken factory near Newcastle are claiming they've been underpaid, with one employee potentially owed $7,000 in backpay.

The workers concerned are supplied to the chicken processor by a labour hire company, Pham Poultry.

Both current and former employees are claiming they've been paid as little as half the legal minimum in cash, and with no payslips, the ABC reports.

Pham Poultry supplies foreign labour the Baiada – the umbrella company for brands including Lilydale and Steggles, and its director, Binh Nguyen, says the claims are "bullshit", arguing staff are paid in-line with the industry award.

Casual workers in the chicken processing industry are legally entitled to around $20 an hour, but two Chinese workers, Steve and Kelly, are claiming they were paid $12.50 an hour for men and $11.50 an hour for women.

Kelly is potentially owed $7,000 in backpay for 11 weeks work.

The workers are also claiming they worked six days a week, sometimes for up to 16 hours a day.

Kelly said the workers were paid $100 to live in a house with up to 30 people, with up to 12 people sharing a room.

"It's very dirty in the house. You have got mice, ants," she said.

The Australasian Meat Industry Employees Union, which earlier this year complained to Baiada about Pham Poultry, believes underpaid workers are probably owed $160,000 a month in backpay.

This isn't the first time Baiada's been in the headlines for less than admirable reasons. In July the ACCC found the company had misled consumers by claiming its chickens were 'free to roam', when really their movements were restricted to an area comparable to an A4 piece of paper.

In 2011 images supplied to the SMH from Baiada's poultry plant in Laverton North in Victoria brought the company's food safety standards into question, with some of the pictures showing uncovered raw chickens palced on top of plastic bags filled with chicken, as well as cockroaches in storage containers.

Not long after, workers at the plant engaged in industrial action for 13 days with a round-the-clock picket line, demanding better pay and working conditions while also putting the spotlight on the death of Sarel Singh, who was decapitated when cleaning a chicken packing machine.


Woolworths considers launching new ‘Local’ brand

In order to satisfy consumers' growing interest in the welfare of local producers, grocery giant Woolworths is considering launching a new retail brand, Woolworths Local.

With both Coles and Woolworths facing increasing scrutiny over where they source their produce, Woolworths has created marketing imagery for a new label, ‘W Local’, which could be used in both its grocery stores and liquor shops, as well as being used in a retail banner for convenience stores and petrol stations, TMWatch reports

Woolworths has also registered the domain name and “Woolworths Local” as a trademark.

The branding could be used across a wide range of products, Woolworths confirmed, including frozen, tinned, snack and packaged foods.

In January this year Woolworths announced its Local Food Sourcing Strategy, which involved supporting small and medium sized producers in Australia and negotiating with them to create appropriate production and supply arrangements.

Tjeerd Jegen, Woolworths managing director of Australian Supermarkets and Petrol said "We recognise that supplying 890 Woolies stores can be a daunting prospect for small and medium businesses, and may simply be beyond the reach of their production capacity.  Woolworths’ Local Sourcing Managers will work with these suppliers to design a plan that suits their business, whether that’s supplying three stores, or 300 stores.”

The local focus comes at a time when both supermarket chains are under scrutiny from the ACCC, which is investigating claims Coles and Woolworths employ bullying tactics to force producers to drop their prices.
A high profile food brands including Simplot and SPC Ardmona have cited an increasing presence of cheap, imported food products on retailers’ shelves as a key contributor to the tough times they’re experiencing.

Just last week a Goulburn Valley fruit grower began about 850 plum trees – one of 170 growers told by SPC Ardmona that their fruit will no longer be accepted because an influx of cheap imports, the high exchange rate and a decline in export markets is putting pressure on local food manufacturers.


ACCC will not oppose Woolworths purchasing three Supa IGAs

The Australia Competition and Consumer Commission (ACCC) has released a statement announcing that it will not oppose the proposed acquisition by supermarket giant Woolworths, of three Supa IGA supermarkets.

The stores which are located in the Queensland areas of Banksai Beach (Bribie Island), Rasmussen (Townsville) and Riverside Gardens (Townsville).

ACCC Commissioner Dr Jill Walker said that the watchdog’s investigation found that the proposed acquisition would not result in a reduction of competition, nor would it be likely to impact on consumer choice.

“After a thorough investigation, the ACCC concluded that the proposed acquisitions would not result in a substantial lessening of competition in any market and are unlikely to reduce consumers’ choice or eliminate a vigorous competitor in the relevant local markets,” Walker said.

“Despite Woolworths’ increase in market share, it would remain constrained by other supermarkets in the local markets with different offerings.”

The ACCC stated that consumers would still have access to other Supa IGA stores in the surrounding areas.


Choice applauds crackdown on ‘organic’ water

Consumer watchdog, Choice, has announced its support of a recent crackdown on organic claims on water bottles.

The ACCC has directed seven companies to remove organic claims from their bottled water products, with an eighth supplier choosing to remove its brand from the market.

The affected brands include Active Organic, Lithgow Valley Springs Organic, Nature's Best Organic, Organic Australia, Organic Falls, Organic Nature's Best and Organic Springs.

The ACCC's finding followed negotiations with the manufacturers, who as a result, will avoid enforcement action.

The water brands must be amended because their organic claims are misleading and could be unjustly used to command a higher price at the checkout, the ACCC found.

The findings are based on the fact that water cannot be organic, as the term relates to agricultural farming ptactices, and water is not an agricultural product.

Choice spokesperson, Tom Godfrey, said "A word like organic is a trigger word to shoppers – it implies health benefits.

"This is a very popular term for food marketers. There are currently more than 300 products on the market trademarked as ‘organic’. It's time for manufacturers to stop relying on healthy-sounding words to boost product sales."

Last month Choice announced that bottled water is costing Australians 2000 times the price of conventional tap water – up to $3.88 for a litre of bottled water, compared to a fraction of a cent for the tap alternative.


Consumers shouldn’t assume ‘baked’ means fresh, says Coles

Defending allegations it misled consumers by masking imported bread as freshly baked products, Coles says consumers shouldn't assume 'baked' means 'baked from scratch.'

The supermarket giant told the Federal Court that standard industry practice could become an issue in proving whether consumers believe bread from Coles' bakeries is baked fresh on-site, AFR reports.

In order to properly defend the allegations brought forward by the ACCC, Coles needs to prove that the average consumer should or would assume that the word 'baked' means something other than 'baked from scratch.'

In June, the ACCC launched legal proceedings against Coles for supplying bread that's partially baked and frozen off-site, transported to Coles stores, ‘finished’ in-store and then promoted as ‘Baked Today, Sold Today’ and/or ‘Freshly Baked In-Store’.

While the ACCC claimed Coles actions create an unfair playing ground for those bakeries genuinely baking fresh products daily, the supermarket chain claims par-baked products are "commonly offered" for sale in supermarkets, fast food outlets, bakeries and restaurants.

Coles also explained that certain bread labels stated the product was 'Made in Ireland.'


The ‘free to roam’ case – why perceptions matter for misleading claims by business

The Federal Court of Australia has brought down its decision in the ‘free to roam’ case. The Court has clarified that our consumer protection laws are about, well, consumers!

Some background to the case can be found here. In brief, two chicken processors made statements that their chickens, when growing, were ‘free to roam in large barns’. The Australian Competition and Consumer Commission (ACCC) noted that the chickens each had less space than an A4 sheet of paper for much of their growing cycle. The ACCC claimed that the advertising was misleading and deceptive, and contravened the Australian Consumer Law. The Federal Court has agreed.

The controversy behind the case is that chickens ‘flock’. They do not tend to wander aimlessly, even if given the chance. An expert in animal welfare provided evidence to the Court that:

“The scientific literature on stocking density indicates that stocking densities [more than those involved in the case] do not affect the spatial distribution of broiler chickens, the time spent walking, the distances travelled by commercial broiler chickens or walking ability …”.

At least one commentator made the same point arguing that the ACCC was not protecting animal welfare by its case.

No, they weren’t!

As the Court has made clear, animal behaviour and animal welfare is not the relevant test. The Consumer Law is anthropomorphic. It asks what consumers will infer from claims made by business.

“It is necessary for the Court to determine how this statement would reasonably be understood by a significant number of those persons to whom it was directed and, in particular, whether the phrase would have conveyed, as the ACCC contended, the assertion that the chickens had “substantial space available allowing them to roam around freely” in the sheds.”

And the Court agreed with the ACCC.

For business the lesson is clear. In advertising, business must ask themselves a simple question: What will consumers infer from my claims? If the inference is false then the advertisement is misleading and deceptive. Whether ‘organic’, ‘full of fruit’, ‘free range’ or some other term, the consumer laws look at the interpretation by consumers.

Stephen King does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

This article was originally published at The Conversation. Read the original article.


Voluntary supermarket code still under negotiation

Coles and Woolworths are reported to still be in negotiations with peak body, the Australian Food and Grocery Council (AFGC) over a voluntary code of conduct.

The completion of the code, which is designed to manage relationships between Australia’s supermarket giants and suppliers, is reported to still be months away, The Australian reports.

The slowdown in negotiations is said to be due to pressure from agribusiness leader Donald McGauchi, who urged the Australian Competition and Consumer Commission (ACCC) to accelerate its investigation into alleged misuse of power in regards the duopoly’s suppliers.

In addition to ACCC investigations, both Coles and Woolworths are said to be unable to reach an agreement over the infamous private labelling issue.

The AFGC has been pushing for the retailers to employ separate buying teams for private label products to avoid the occurrence of ‘knock off’ versions of established branded products. However, the supermarkets deem that maintaining separate buying teams would be too costly.

Chairman of cattle giant, The Australian Agricultural Company (AACo) Donald McGauchie, has also encouraged the ACCC to speed up its investigation into alleged bullying tactics that the supermarkets are using to pressure suppliers.

“There are some accusations made against the supermarkets that I have heard some a number of sources that need investigation and the ACCC needs to do that,” said McGauchie.

“They need to have sensitive was of doing that because people tell m they are concerned about the way supermarkets treat them and are concerned that is they are seen to be making comments about that publicly, it would endanger their business.”

A new round of negotiations for the voluntary code will take place next month.

Coles fined $61,000 for country of origin claims

Coles has paid six infringement notices totalling $61,200 for allegedly misleading representations about the country of origin of fresh produce in five stores.

The stores are located across Queensland, NSW, Western Australia and the ACT and the infringement notices refer to claims made between March 2013 and May 2013.

The fines follow an investigation by the Australian Competition and Consumer Commission after a complaint was made that Coles had displayed imported navel oranges and kiwi fruit under a board which read 'Helping Australia Grow' and accompanied by the Australian Grown symbol.

The ACCC also discovered the same signage at a number of Coles stores promoting the sale of imported asparagus and almonds.

While the overseas country of origin was correctly identified either by stickers on the produce, on its packaging or under the display bin, the ACCC says the signage gave consumers the impression the produce was Australian grown.

"Consumers should be able to rely on the accuracy of claims about food, particularly when they are prepared to pay a premium for products made in Australia. Misleading country of origin claims can also have a significant impact on the competitive process and hurt the local economy," ACCC chairman, Rod Sims, said.

"While this does not appear to be a case of widespread or systemic conduct, ‘Helping Australia Grow’ is a significant national campaign driven hard by Coles to advertise its fresh produce. This is a lesson to all retailers that they need to take care when undertaking significant advertising campaigns to ensure consumers are not misled by those campaigns."

According to Coles, the misrepresentation of imported produce as Australian grown was unintentional – the result of stock being relocated within stores but not the corresponding promotional imagery.

This isn't the only instance which has seen the supermarket giant fall under the gaze of the ACCC.

Just last month the competition regulator launched legal proceedings against Coles for engaging in false, misleading and deceptive conduct in the supply of bread that was particually baked and frozen off-site, then transported to Coles stores, 'finished' in-store and marketed as 'Baked Today, Sold Today' or 'Freshly Baked In-Store'.

The ACCC is also investigating the conduct of both Coles and Woolworths in regards to their dealings with suppliers, amid accusations both supermarket chains use bullying tactics to force prices down.


Code of conduct nearing completion

The code of conduct being developed to manage relationships between retailers and suppliers is nearing completion, says the Australian Food and Grocery Council (AFGC).

According to the ABC, the AFGC has spent months developing a dispute resolution mechanism with the supermarket duopoly – Coles and Woolworths.

The next step is to host a roundtable with a number of industry stakeholders such as the National Farmers Federation, which earlier this year pulled out of negotiations, arguing the code should be mandatory, not voluntary.

The AFGC hopes to hold the roundtable in the next few weeks.

The code is centred on the principles of codifying contractual arrangements between suppliers and retailers, ensuring that efficiency in the supply chain is achieved, and that the supply chain is not overregulated.

CEO of the AFGC, Gary Dawson, believes that a voluntary code would be just as effective as a mandatory one in ensuring the participation of the supermarket giants, especially considering failure to sign up could result in poor supplier relationships.

“It would be very difficult for suppliers given how competitive the market is. An important element of the code is about ensuring efficient retailer/supplier relationships,” Dawson told Food Magazine.

“To Woolworths’ and Coles’ credit, they have taken that on board and we are working through those issues.”

Dawson said that the AFGC is working with the retailers to develop an effective code that provides more contractual certainty, encourages investment in innovation, provides for appropriate sharing of risk and an effective dispute resolution mechanism – all without adding unnecessary compliance costs on suppliers.

Earlier this year, the ACCC announced it would be investigating the supermarket duopoly amid claims Coles and Woolworths bully their suppliers to force prices down.

The investigation is considering claims that the supermarkets impose penalties on suppliers that aren't part of the terms of trade, favour homebrand products, threaten to remove products from the shelves if extra payments or penalties aren't paid and fail to pay prices agreed with suppliers.

A key element of the code of conduct will be an examination of the shelf space supermarkets allocate to private label products.