Heinz in line for next big company fine

Posted by AFN Staff Writers on 6th August 2018

HEINZ faces a near-maximum $10 million fine for misleading consumers by claiming one of its snacks for toddlers was beneficial for young children.

The Australian Competition and Consumer Commission, at a federal court hearing last week to determine the company’s penalty, requested the $10m fine as a deterrent to the food industry.

Heinz asked for $400,000 saying the figure would effectively wipe the gross profit made by the company in the period before Shredz were pulled from the shelves in 2016, after more than one million units were sold in about three years.

Justice Richard White reserved his decision on penalty to a date to be fixed.

ACCC chairman Rod Sims began 2018 calling for stronger penalties for big business to change corporate culture and improve the treatment of consumers.

Penalties for consumer breaches by a company only recently rose from $1.1 million to $10 million, or 10 per cent of turnover.

So far this year’s big fines include Flight Centre $12.5m, Telstra $10m, Ford $10m, Air NZ $15m, Meriton $3m.

“For larger companies, we really need penalties of well above $100 million for those companies to get the message that this is behaviour that they should not be engaged in,” Mr Sims said in February.

The Shredz products were a dehydrated snack made from 99 per cent fruit and vegetable ingredients and did not contain any preservatives, artificial colours or flavours but had a high sugar content.

The ACCC’s action followed a complaint by the Obesity Policy Coalition about food products for toddlers that make fruit and vegetable claims but are predominantly made from fruit juice concentrate and pastes, which have a very high sugar content.

The World Health Organisation recommends limiting the intake of foods containing fruit juice concentrate to reduce the risk of obesity and tooth decay.

In his judgment in March Justice White ruled the prominent statements on the packaging, that the Shredz snacks comprised 99 per cent fruit and vegetables together with the pictures of the fruit and vegetables, conjured impressions of nutritiousness and health.

“I am satisfied that each of the Heinz nutritionists ought to have known that a representation that a product containing approximately two-thirds sugar was beneficial to the health of children aged one to three years was misleading,” he said.

At the time of the judgment, Heinz said it was disappointed with the ruling but respected the court’s decision.

“Heinz is committed to providing high-quality food products and to communicating clearly and transparently with consumers on its packaging,” it said in a statement.

In testimony at the trial, expert witness for the ACCC, nutritionist Rosemary Stanton, told the court that depictions on the packaging were misleading as the product “is not good for toddlers”.

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