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ACCC Crackdown on Green Claims to Impact Food Companies

Published: 1 Nov 2010

By Joe Lederman
FoodLegal Lawyers and Consultants
© Lawmedia Pty Ltd, November 2010

Eco marketing claims or green claims are becoming common marketing strategies. The environmentally sustainable aspects of the product are attractive selling points or can relieve consumer anxieties. Such strategies help companies live up to their corporate social responsibilities and best of all, as they say, it can be good for the environment.

This article examines a recent court case that highlights some of the legal exposures. Although the case is not about a food product, the Australian Competition and Consumer Commission (ACCC) is giving this area its full attention. FoodLegal’s seminar on Monday 29 November 2010 addresses many of the legal issues and implications in great depth.

The Federal Court case of ACCC v Goody Environment Pty Ltd and Nupak Australia Pty Ltd

In July 2010, the Australian Competition and Consumer Commission (ACCC) instituted legal proceedings against Goody Environment Pty Ltd (“Goody Environment”) and Nupak Australia Pty Ltd (“Nupak”) alleging that the companies contravened sections 52 and 53 of the Trade Practices Act 1974 (the TPA) by allegedly having engaged in misleading and deceptive conduct and having allegedly made false representations regarding ‘Goody’ brand plastic bags.

The ACCC claimed that Goody Environment and Nupak made representations that 'Goody' brand plastic bags were biodegradable and compostable in accordance with the Australian Standard 4736:2006 ( Get AS 4736-2006) Biodegradable plastics—Biodegradable plastics suitable for composting and other microbial treatment ("the Australian Standard") and that they complied with the provisions of the Plastic Shopping Bags (Waste Avoidance) Act 2008 (SA) (“The Waste Avoidance Act”) to be sold legally in South Australia.

The ACCC mounted its case on the basis that Nupak Goody Bags did not biodegrade or disintegrate in accordance with the criteria of the Australian Standard and that the plastic material further contained a toxic substance molybdenum in amounts that exceeded the maximum concentration prescribed by the Australian Standard. By reason of its non-compliance with the Australian Standard, the Goody Bags also would not comply with the requirements of the SA Waste Avoidance Act.

On 13 October 2010, by consent, Justice Lander of the Federal Court declared that Nupak contravened section 52 and 53 of the Trade Practices Act 1974 and ordered Nupak to:

  • publish corrective notices on its website and in The Advertiser newspaper;
  • send a letter to each Nupak customer supplied with Goody plastic bags informing them of the orders of the Federal Court and the undertakings given by Nupak;
  • implement a new Trade Practices Compliance and Education Program; and
  • contribute $10,000 towards the ACCC's costs of the proceedings.

Complexities and legal risks in green marketing

While proceedings in this case appeared to be moving to a trial set for March 2011, the circumstances have raised a number of interesting issues about the use of eco-labelling and the green marketing of food.

Eco-claims may include many different strategies, and the regulatory scheme within Australia is complex. While the Australia New Zealand Food Standards Code (Food Standards Code) sets out some requirements for mandatory and voluntary labelling of food products, it makes no specific mention of environmental claims.

The Trade Practices Act 1974 including the new Australian Consumer Law can also operate independently with a range of different possible enforcement measures for different types of claims and possible offences.

In addition to other statutory requirements, there are various Australian and international certification schemes and standards, such as the AS 4736:2006 (Get AS 4736-2006) on Biodegradable plastics that was relevant to the Nupak case. The regulatory scheme in Australia over this area of labelling and marketing is a multi-tiered, interactive system with a number of mandatory and industry standards, codes of practice and certifications to be considered.