“Fresh” implications from Federal Court decision on Coles bread fine

Posted by AFN Staff Writers on 13th April 2015
“Fresh” implications from Federal Court decision on Coles bread fine
“Fresh” implications from Federal Court decision on Coles bread fine

The decision by the Federal Court of Australia to order Coles Supermarkets Australia Pty Ltd (Coles) to pay penalties of $2.5 million for making a claim that its par baked products were “fresh”, is likely to have broad implications for other food products being described as “fresh”.

Australian Food News reported in September 2014 that the Federal Court had found Coles guilty of misleading shoppers with false claims on bakery products that were advertised as “baked today, sold today” and “freshly baked in-store”, when this was not the case. The Federal Court banned Coles from making claims that its bread products are ‘freshly baked’ or baked on the day for three years. The judgement came after court action was initiated by the Australian Competition and Consumer Commission (ACCC) in June 2013, alleging false, misleading and deceptive conduct in the supply of bread that was partially baked and frozen off site, transported to Coles stores and ‘finished’ in-store.

What is ‘fresh’?

The ACCC has previously described ‘fresh food’ in its Food Descriptor Guidelines (published 23 November 2006) as ‘food that is put on sale at the earliest possible time and close to the state it would be in at the time of picking, catching or producing’. According to these Food Descriptor Guidelines, a ‘fresh’ product is “not canned, cured, dehydrated, frozen, processed or preserved.”

According to Australian food law experts and consultants FoodLegal, the ACCC’s intention in publishing its Food Descriptor Guidelines was to guide food companies for an understanding of the ACCC viewpoint—so as to avoid a descriptor being misleading or deceptive or otherwise in breach of the Australian Consumer Law.

Fresh’ varies depending on food category

However, the concept of ‘fresh’ can have a different meaning according to the food product category, according to Joe Lederman, FoodLegal Managing Principal.

“Some foods stay fresh longer than others,” Mr Lederman said. “It is therefore not appropriate to expect a common definition of ‘fresh’ for all foods by reference to a particular time-span of freshness ,” he said.

“For instance, the concept of ‘fresh’ as in ‘fresh’ bread which may have a ‘freshness’ of hours (or certainly within a day),that is quite different from the concept of ‘fresh’ when describing a ‘fresh apple’ that has a much longer shelf life because of modified atmospheric packaging and/or cold storage,” Mr Lederman said.

Mr Lederman said the descriptor of a food being ‘fresh’ in the context of a particular category of food might also take into account not just the period of “freshness” expected by the average reasonable consumer for the product but also use the word “fresh” as a comparative adjective. He said the use of the word ‘fresh’ to describe milk was an example of this. Both refrigerated milk and ultra-heated, long-life, aseptically-packaged milk are processed, but refrigerated milk is often referred to as “fresh”. Mr Lederman said that this example illustrated how the description of “fresh” was typically attributed to a product which in its current packaging has the shorter shelf-life and/or requires refrigerated storage at the point of sale.

“Consumer expectations in relation to what constitutes a ‘fresh’ product are constantly changing, especially with the introduction of even ‘fresher’ alternatives,” Mr Lederman said. “Given the increased consumer awareness about food and health, standards of the reasonable consumer and expectations in regards to ‘fresh’ food are likely to be raised and become stricter in coming years,” he said.

Mr Lederman suggested that it might be time for the ACCC to revise its 2006 Food Descriptor Guidelines.

Coles “fresh” labelling had “significant potential to mislead or deceive”

In imposing these penalties, Chief Justice Allsop said “the contravening conduct in this case is substantial and serious”.

“Notwithstanding the absence of any specific evidence as to loss or damage by a consumer or a competitor, it is clear that the significant potential to mislead or deceive and thus to damage competitors, the duration of the conduct, and the fact that the goods in relation to which the impugned phrases were used were “consumer staples” indicate that the objective seriousness of the offending conduct was considerable”,” Chief Justice Allsop said.

“The evidence before the Court showed that Coles had engaged in the campaign with the clear purpose of improving its market share vis-à-vis its competitors, being bakeries such as Bakers Delight,” Chief Justice Allsop said. “It set out to do so by engaging in the conduct that, in fact, breached the Australian Consumer Law,” he said.

Penalty sends “strong message” to food companies, ACCC

ACCC Chairman Rod Sims said it was important that food and beverage companies recognised that “consumers are entitled to reliable, truthful and accurate information”.

“This penalty sends a strong message to companies that they should not use broad phrases in promotions that are deliberately chosen to sell products to consumers but which are likely to mislead consumers,” Mr Sims said.

“The ACCC took this action because it was concerned that Coles’ “Baked Today, Sold Today” and “Freshly Baked In-Store” claims about its par baked bread were likely to mislead consumers,” Mr Sims said. “The conduct also placed independently-owned and franchised bakeries that entirely bake bread from scratch each day at a competitive disadvantage,” he said.

Coles’ conduct was part of a nationwide campaign that was promoted in 637 Coles supermarkets. “Baked Today, Sold Today” was used extensively on packaging for par baked products over a three year period. During this time, Coles sold a significant number of par baked products and generated substantial revenue from these sales.

Case background

In September 2014, the Court declared that by using the phrase “Baked Today, Sold Today”, Coles represented to customers that certain bread products were entirely baked on the day on which they were offered for sale, when this was not the case, in contravention of the Australian Consumer Law (ACL).

The Court also declared that by using the phrases “Freshly Baked In-Store”, “Freshly Baked” and “Baked Fresh”, Coles had represented that certain bread products were baked from fresh dough, entirely baked on the day on which they were offered for sale and had been entirely baked in the Coles in-store bakery, when this was not the case and in contravention of the ACL.

At that time, the Court ordered that Coles:

  • be restrained for a period of three years from making any representation on packaging, signage, website or other promotional material that bread products were entirely baked on the day of sale or were baked from fresh dough when this was not the case; and
  • place a corrective notice on its website and in its in-store bakeries.